UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
under Section 12(b) or (g) of
The Securities Exchange Act of 1934
FULL TILT SPORTS, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1416864
(State of incorporation) (I.R.S. Identification No.)
5525 Erindale Drive, Suite 201, Colorado Springs, Colorado 80918
(Address of principle executive offices) (Zip Code)
(719) 260-8509
(Registrant's telephone number including area code)
Securities registered under Section 12 (b) of the Exchange Act:
None
Securities registered under Section 12 (g) of the Exchange Act:
Title of Class:
Common Stock, par value $.001 per share
Copies of all communications, including all communications sent
to the agent for service, should be sent to:
David J. Babiarz, Esq.
Neil P. Movitz, Esq.
Overton, Babiarz & Sykes, P.C.
7720 East Belleview Avenue, Suite 200
Englewood, Colorado 80111
(303) 779-5900
Page One of 114 Pages
Exhibit Page is Located at Page 27.
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TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business 3
Item 2. Management's Discussion and Analysis or Plan of
Operation 10
Item 3. Description of Property 14
Item 4. Security Ownership of Certain Beneficial Owners
and Management 14
Item 5. Directors, Executive Officers, Promoters
and Control Persons 15
Item 6. Executive Compensation 17
Item 7. Certain Relationships and Related Transactions 19
Item 8. Description of Securities 20
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Stockholder Matters 22
Item 2. Legal Proceedings 23
Item 3. Changes in and Disagreements with Accountants 23
Item 4. Recent Sales of Unregistered Securities 24
Item 5. Indemnification of Officers and Directors 24
PART F/S
Financial Statements 26
PART III
Item 1. Index to Exhibits 27
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PART I
Item 1. Description of Business
Full Tilt Sports, Inc. (the "Company") is a Colorado
corporation incorporated on June 30, 1997. The Company was
organized to manufacture and distribute an apparel line of
sportswear capitalizing on the attitude encompassed in its name
"Full Tilt Sports". The Company has very limited revenue to
date, and activities have been limited to organizational efforts,
obtaining financing, designing, ordering and distributing in a
very limited manner the apparel line of sportswear. The Company's
executive offices are presently located at 5525 Erindale Drive,
Suite 201, Colorado Springs, Colorado 80918, and its telephone
number is (719) 260-8509.
The Company completed its initial capitalization in June,
1998. The Company raised $261,400 in two private placements
exempt from the registration requirements of the Securities Act
of 1933. Proceeds from those offerings, together with other
recent financing, have been used for organization and
administration expenses, and working capital for inventory and
other operating expenses. The Company currently has
approximately 60 shareholders.
The Company has developed a line of active sportswear for
the retail clothing market bearing the trademark and logo "Full
Tilt" (the "Apparel Line"). The Company's initial focus has been
production of recreational and athletic clothing which management
intends to be distributed through sporting goods retail stores
and certain department stores. The Company's target market for
sales of the Full Tilt Apparel Line is retail purchasers of
recreational and sports clothing, of both sexes and of all ages.
Current products include t-shirts, golf shirts, sweat shirts,
hats and fleece items which have been distributed through
personal contacts of the Company's management, at sporting events
and through athletic team sponsorships. The Company must be
considered in the promotional stage and in the very early phases
of its development, embarking upon a new venture. Prospective
investors should be aware of the difficulties encountered by such
enterprises, as the Company faces all the risks inherent in any
new business, including the absence of any prior operating
history, need for working capital, lack of market recognition and
intense competition. The Company's marketing strength is
anticipated to be endorsement of the clothing by high profile
professional athletes. The Company's perceived advantage in
obtaining these endorsements is that certain of the Company's
principals are former professional athletes who have numerous
personal contacts with other athletes. The Company operates
exclusively in one industry, the retail apparel industry.
Management has also investigated the potential for
constructing and managing an indoor sports facility. It is hoped
that the Company can take advantage of the rising popularity of
team sports such as indoor soccer and in-line hockey by
constructing and operating an indoor facility and organizing
sports leagues. The Company contemplates construction of one or
more multi-sport indoor facilities for soccer and in-line (or
"roller") hockey, and several related activities. It is not
anticipated that the Company will implement funding or
construction of the sports facility until 1999 at the earliest,
pending the receipt of additional funding from future revenue or
third party financing.
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Initially, the Company will be dependent on the efforts and
expertise of certain of its founders and executive officers.
Roger Burnett, President and Chief Executive Officer of the
Company, is a former professional baseball player in the New York
Yankees baseball organization and will manage production,
strategic development and anticipated expansion. J. Fisher
DeBerry, currently head football coach at the United States Air
Force Academy and Executive Vice President of the Company, will
participate in organizational development and corporate marketing
on the Company's behalf. Finally, Joseph DeBerry, Vice President
and a director, was also a member of the Yankees organization, as
well as the Cincinnati Reds and Kansas City Royals organizations,
prior to his affiliation with the Company. Mr. DeBerry will
oversee marketing, distribution and production of the Apparel
Line and assist in strategic planning. Loss of the service of
any of these individuals could adversely affect the Company's
business.
Marketing Management of the Company believes that
marketing and future sales of the Full Tilt Apparel Line depend to
a large degree on the uniqueness and attraction of the Full Tilt
trademark and concept. Marketing efforts to date have included
distribution of promotional apparel items to professional athletes
such as members of the Denver Broncos football team, sales at sports
events such as golf tournaments, promotion through personal contacts
of the management of the Company and sponsorship of sports teams who
use promotional clothing items. Radio advertisements have been
broadcast for several months on a syndicated radio show on over
200 AM and FM radio stations nationally.
Future marketing is anticipated to be centered on
endorsement and exposure by high profile professional athletes.
These endorsements and exposure are expected to give the Company
an advantage to compete in its industry. Professional athletes
are expected to endorse the products through media appearances
where the items will be displayed. The Company's perceived
advantage in obtaining these endorsements is that several of the
Company principals are former professional baseball players who
have personal relationships with many professional athletes.
These athletes include Colorado Rockies and New York Yankee
baseball players and Denver Bronco football players. The
principals have contacted many of these professional athletes and
have received favorable responses to its apparel. The Company
anticipates retaining a small number of these athletes under a
formal agreement where, in exchange for an equity interest in the
Company or other compensation, these athletes would commit to
wear and use the items in a visible manner in the media. The
Company would also contact as many other athletes as possible,
give them complimentary items and encourage their wear and use in
a visible manner. Although the Company has made numerous contacts
and has obtained favorable responses from many professional
athletes, the Company has not entered into any contractual
agreements with any professional athletes as of the date of
filing of this registration statement.
Additional future marketing, depending on available funds,
will be made through advertising mediums such as television,
print media, catalogue distribution, Internet and a toll free
telephone number for order intake. A catalogue has been planned
for initial distribution in the Colorado Springs area, that will
allow for direct purchase of the Apparel Line from the Company.
The Company is presently completing design and lay-out of its
first catalogue, which will carry the Company's complete line and
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provide for placement of orders through a toll free telephone
number. Advertisement on the Internet is also planned, whereby
advertisements will be displayed on personal computers logged
onto the Internet. Internet users will then be able to order
items directly on the Internet or through the toll free telephone
number.
Manufacturing As of July 31, 1998, the Company has
manufactured a sample inventory of the Apparel Line of
approximately 50 dozen items with the Full Tilt logo. These
items include t-shirts, golf shirts, sweat shirts, caps and
fleece items. The Company had engaged the services of
independent third party maufacturers, including N.E. Wear of San
Francisco and Colorado Clothing Company of Denver, to manufacture
this sample inventory which consisted of existing styles and
colors. After manufacturing, the items were shipped to another
party who embroidered or silkscreened the Full Tilt logo onto the
item, and added the Company's label.
In the future, only final product inventory will be
produced. The final product inventory shall be produced directly
for the Company by one or more manufacturers who are capable of
producing all items required by the Company and to the Company's
specifications. The items shall be of a higher quality, superior
to the quality of the test inventory and shall be produced with
the Full Tilt logo and label. The Company is in the process of
arranging for these manufacturers to produce its initial orders
of inventory of the Company's final product. Future inventories
may be expanded to include additional athletic and recreation
clothing items and accessories, as determined by consumer
demands.
The Company does not have a contract with the manufacturer
for continued supply, but will place individual orders for
inventory as needed. While management believes that the Company
will have a ready source of materials and manufacturers for its
apparel items, there is no assurance that such inventory can be
acquired at desired costs and quality standards. The lack of a
long term contract and business relationship with current sources
of supply present a risk that the Company may not be able to
acquire future inventory to meet demand.
Distribution The Company's present method of
distribution has been of the sample inventory only, to personal
contacts of the Company's management, sales at sporting events
such as golf tournaments, and sales to sports teams such as
soccer teams and clubs. In addition, items are provided to the
sports teams and clubs as sponsorship for promotion of the
Company. Approximately 20 dozen items of the sample inventory
have been sold and 20 dozen items have been distributed as
promotional items, primarily in the Colorado Springs and Denver
metropolitan areas.
The Company's future distribution plans are for the Apparel
Line to be distributed primarily through retail sporting goods
and department stores. The Company has already contacted the
buyers for several retail outlets such as Gart Sports and
Nordstrom's Department Store, and has received favorable
responses. Management has been advised that such buyers are
interested in its products subject to review of the final
inventory of the Apparel Line and if sufficient advertisement is
provided by the Company. The Company plans to present its final
product inventory to the retail outlet buyers upon its production
and delivery. As the final product inventory is anticipated to
be of superior quality to the sample inventory, the Company have
not presented any items for purchase to the buyers.
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While the Company has discussed preliminary arrangements for
distribution with a number of retail outlets, it currently has no
firm commitments or contracts for that purpose. As a result,
there is no assurance that the Company will have an assured
source of distribution for its products. In addition, due to the
recent entry of the Company into the retail clothing market,
retailers may be reluctant to accept its product pending future
demonstration of consumer demand and a ready source of inventory.
In addition, the Company anticipates distributing the items
directly to customers on the Internet via personal computers.
The customer will be able to dial the Company's address page, or
web page, that will display on the customer's personal computer
the Company's Apparel Line products and instructions to place
orders. The customer would then be able to place an order for
items directly on their personal computer.
The Company will also distribute a catalogue for direct
sales, initially in the Colorado Springs area and then nationwide
if favorable results are achieved. The catalogue will include
pictures and descriptions of the Company's apparel line products
and instructions to place orders. A toll free telephone number
will be provided, which customers can telephone to place orders,
or orders may be made through the mail. The Internet and
catalogue customers will then be billed directly for the desired
items and the items will be shipped directly to the customer.
Competition Competition in the apparel industry is
very intense. There are numerous manufacturers and distributors
marketing sporting apparel throughout the United States, most
with personnel and financial resources substantially greater than
the Company. There already exists many apparel lines which base
their marketing on a name or slogan, such as Nike, Mossimo, No
Fear and Reebok which currently dominate the industry. Many of
these apparel lines are well established in the marketplace with
the consumers and the retail outlets. The Company's general
concept is not unique and the Company will have to establish
itself as a desirable apparel line of clothing in an established
marketplace. Due to the Company's status as a development stage
enterprise, the Company is at a competitive disadvantage with
regard to financial and personnel resources, vis-a-vis its
competitors. Investors should be aware of the competitive
environment in which the Company operates.
Trademark The Company has developed the name and logo
"Full Tilt" with stylized lettering that they believe portrays an
aggressive sports attitude. The Company would like to capitalize
on the popularity of similar sports slogans, such as "No Fear"
and Nike's "Just Do It". Therefore, the value of the Full Tilt
Apparel Line will depend to a large degree on name recognition of
the Full Tilt trademark, and a substantial effort will be made to
exploit the name in marketing the products. The Company has
taken steps to ensure that this trademark will be protected and
not challenged. These protective steps include use of the
trademark in interstate commerce, applying for federal trademark
registration with the U.S. Patent and Trademark Office and
registering the trademark with the Colorado Department of State.
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The Company has applied for trademark registration with the
U.S. Patent and Trademark Office. To apply for federal
registration, the Company must first use the mark, in interstate
commerce or commerce between the U.S. and another country.
Before issuing a federal registration, the U.S. Patent and
Trademark Office determines whether there would be a conflict
with an existing mark. If a conflict is determined to exist, the
trademark application may be rejected by the Patent and Trademark
Office. A conflict exists when there would be a likelihood of
confusion, that is, whether relevant consumers would be likely to
associate the goods or services of one party with those of
another party. To find a conflict, the trademark need not be
identical, and the goods do not have to be the same. There are
no assurances that the Company's trademark application will be
accepted.
Once the trademark is registered with the U.S. Patent and
Trademark Office, the Company is presumed to be the owner of the
trademark for the goods and services specified in the
registration, and to be entitled to use the trademark nationwide.
The U.S. registration provides protection only in the United
States and its territories. To obtain protection in other
countries, the trademark must be registered in those counties.
The federal trademark registration is good for ten years, but can
be renewed. While the Company is not aware of any registrations
of the trademark or uses of the trademark in the manner that will
pose significant problems to the Company, there is no assurance
that registration will be granted or that the Company's use of
the mark will not be challenged.
The Company has filed its corporate name "Full Tilt Sports"
with the State of Colorado Secretary of State. This filing
protects the name from registration by any other parties in
Colorado. This registration, along with the use of the
trademark, provides some protection of the Company's use of the
trademark in Colorado.
The Company has made use of the trademark in Arizona,
Colorado and Texas through distribution of the Apparel Line in
those states. The Company has also used the trademark in
interstate commerce by manufacturing and distributing the Full
Tilt Apparel Line between several states.
The registration and use of the trademark does not assure
that a user of the trademark does not already exist. If a prior
user exists, that user may request a court-ordered injunction
prohibiting the Company's use of the trademark in that locale in
a manner that conflicts with the prior user. However the federal
registration of the trademark will protect the Company's use of
the trademark in all other locations in the United States and its
territories.
The Company is aware of the use of the trademark Full Tilt
for purposes unrelated to the Company's use but does not
anticipate a challenge from these users. There is a state
registered "Full Tilt" trademark in Massachusetts for clothing
and a common law use of the trademark by a snowboard manufacturer
in the state of Washington. The Company does not consider the
use of the trademark in these two states a detriment to marketing
Full Tilt Apparel Line on a national basis. However, the Company
cannot guarantee that a challenge will not arise in the future to
the use of the name in a particular location.
Sports Facility The Company's business plan also
contemplates construction of one or more multi-sport indoor
facilities for soccer and in-line (or "roller") hockey, and
several related activities, if and when the Company has
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sufficient funds. It is not anticipated that the Company will
purchase the land for the facility site or construct this sports
facility until 1999 at the earliest, pending the receipt of
additional funding from future revenue or third party financing.
In the event the Company is able to construct the first
sports facility (the "Facility"), it would be constructed in
Colorado Springs on real estate that the Company has an option to
purchase from an affiliate. This land (the "Property") will be
acquired by the Company upon the receipt of additional funding
from future revenue or third party financing. Following
construction of the initial Facility, and subject to available
working capital, the Company shall investigate expansion into
additional cities in the United States.
Acquisition of the Property and construction of the Facility
are currently estimated by the Company to cost approximately
$800,000. The Company has an option to purchase the Property,
which consists of approximately two acres of real estate located
in northwest Colorado Springs from an affiliate of the Company,
J. Fisher DeBerry, Executive Vice President and a director of the
Company, for a purchase price of $132,500. This real estate,
located near the corner of Centennial and Garden of the Gods
Road, was acquired by Mr. DeBerry in anticipation of constructing
this sports facility. The Property may be acquired by the
Company for the same price paid by Mr. DeBerry, along with
accrued interest to date. A portion of the purchase price will
be paid with debt financing anticipated to be acquired by the
Company. While no definitive contract has yet been executed,
management's current estimate for total cost of construction for
a facility estimated at approximately 33,000 square feet is
$700,000. A substantial expenditure will be necessary to finish
the interior of the Facility and acquire equipment necessary for
operation.
The initial sports Facility in Colorado Springs is
envisioned to accommodate several different sporting activities.
Plans call for a state-of-the-art sports complex providing a
multipurpose indoor court (the "Sport Court") for sports such as
soccer and roller hockey. The Sport Court, together with
spectator bleachers and player benches, will encompass a majority
of the Facility. A smaller portion of the Facility will be
devoted to computerized pitching machines for both baseball and
softball, as well as individual batting cages for instruction and
practice. The remaining portions of the Facility will include
food and beverage concessions, an arcade, executive offices, a
pro shop and a viewing area on the mezzanine level. The Facility
is presently envisioned to include approximately 33,000 square
feet, primarily on one level.
If constructed, the Colorado Springs Facility will be
managed and operated by the current officers of the Company,
assisted by one or more staff. The Company will also be assisted
by independent contractors who may act as instructors in
baseball, softball and other activities. While each of the
Company's officers has experience in the professional sports
industry as members of professional baseball, only one has
experience in the management of a recreational facility.
However, the Company's officers and directors believe they have
the ability to operate the Company in accordance with its
business plan.
Research and Development The Company did not commission
a formal market or feasibility study as part of its research and
development in regard to sale of the Full Tilt Apparel Line. Due
to the cost and delay inherent in obtaining such a market study,
the Company has determined to proceed on the basis of its own
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estimates. Estimates as to sale of the Full Tilt Apparel Line,
and projected revenues were made by officers and directors. The
Company has distributed the sample inventory of the Apparel Line
through sales and promotions, and has received a favorable
response as to the acceptability of the Apparel Line in the
marketplace and that items will be sold. However, there is no
assurance that the Apparel Line will be accepted by the public.
Risk Factors In addition to its status as a
development stage enterprise, the Company faces numerous risks
in connection with the operation of its business. These risks
include lack of a proven market for the Company's merchandise,
lack of an assured manufacturer for its product, lack of existing
endorsements with professional athletes and dependence on key
personnel. While management will do its best to mitigate these
risks through implementation of the Company's business plan, there
is no assurance such efforts will be successfull. Investors should
evaluate these and other risks outlined in this Registration Statement
prior to making an investment in the Company.
Employees The Company presently employs three
individuals, all of whom are also officers of the Company. Roger
Burnett, President and Joseph DeBerry, Vice President currently
serve on a full-time basis and will be responsible for day-to-day
operation of the Company and the marketing, production and
distribution of the Full Tilt Apparel Line, as well as strategic
planning and expansion of the Company's business. Fisher
DeBerry, Executive Vice President and a director of the Company,
currently devotes only a minor portion of his time to the Company
and assists in marketing and promotion.
Messrs. Burnett and Joseph DeBerry currently serve pursuant
to one year employment agreements executed with the Company
effective September 1, 1997. Each of these individuals will be
compensated at the rate of $30,000 per annum, plus health
insurance and other benefit plans maintained for the benefit of
all employees of the Company.
The Company does not expect any significant change in the
number of employees over the next twelve months. Manufacturing
will be contracted to outside entities. From time-to-time, the
Company also engages the services of outside consultants to
assist in the Company's business, including attorneys,
accountants, and marketing and advertising personnel. The
Company may engage the services of additional individuals in the
future as the needs of its business dictate and the financial
resources of the Company permit.
Reports to Shareholders Following the effective date of
this Registration Statement, the Company will be subject to the
informational requirements of the Securities Exchange Act of 1934
(the "1934 Act"). In connection therewith, the Company will be
required to file annual and quarterly reports with the Securities
and Exchange Commission and will be required to comply with the
proxy solicitation rules contained in the 1934 Act. Shareholders
of the Company will receive an annual report containing audited
financial statements of the Company in conjunction with any
annual meeting of shareholders. The Company may also prepare and
deliver quarterly and other interim statements to shareholders as
management deems appropriate.
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Item 2. Managements's Discussion and Analysis or Plan of Operation
Plan of Operation The Company's plan of operation for
the twelve months ending July 31, 1999, is to gain acceptance in
the marketplace and establish the long-term viability of its Full
Tilt Apparel Line. Revenue will be generated from sale of the
Apparel Line, anticipated to be through retail sporting goods and
department stores. Major components of that plan of operation
include marketing and distribution of the merchandise and
production of inventory sufficient to meet the anticipated
demand. The Company has undertaken efforts to address each
component of its plan, but was temporarily delayed by a lack of
working capital. With the completion of two private placements
in the first half of calendar 1998, management believes the
Company is positioned to pursue its plan beginning immediately.
The Company is voluntarily filing this Registration
Statement under Section 12(g) of the Securities Exchange Act of
1934 to become a reporting Company under rules and regulations of
the Securities and Exchange Commission. Management hopes that
the Company will achieve added credibility with its existing and
potential investors as a result of its status as a reporting
entity. In addition, management may undertake efforts to
organize a market in the Company's Common Stock by soliciting the
interests of one or more security broker dealers who may become
market makers of the Company's Common Stock.
The Company raised approximately $261,000 in these private
placements, most of which remained available at June 30, 1998 to
implement the Company's business plan. Coupled with anticipated
revenues from the sale of its merchandise, management anticipates
the Company has sufficient working capital to satisfy its cash
requirements for the next twelve months. Those requirements
include acquisition of an inventory of finished merchandise to be
distributed to potential purchasers, marketing, advertising,
general and administrative expenses. Management does not
anticipate the need to raise additional capital from outside
sources for the next twelve months. However, short-term
financing, if necessary, may be obtained from loans
collateralized by the Company's inventory or potential purchase
orders.
Limited working capital obtained from the Company's founders
during the period ended December 31, 1997 was used for test
marketing of the Apparel Line. Such efforts included production
of sample merchandise, travel and other marketing expenses
designed to investigate and evaluate the market for such apparel.
Proceeds from the recently completed private placements will
help expand these efforts and help defray general and
administrative expenses pending anticipated revenue from sale of
the Company's merchandise.
Immediate marketing efforts will be directed toward
convincing buyers on behalf of various retail stores to purchase
merchandise from the Company. Such efforts primarily consist of
personal contacts by officers and directors of the Company,
together with limited advertising in print, radio and television.
Management anticipates significant travel during the next few
months in an effort to make contact with these buyers. In
addition, the Company must demonstrate the ability to produce and
deliver sufficient quantities of merchandise as required by the
buyers in order to obtain significant orders.
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A major component of the Company's marketing plan includes
potential endorsement of its Apparel Line by high-profile
professional athletes. Toward that end, management will also be
refining its merchandise for distribution and discussion with
such individuals. Management anticipates compensating such
individuals with an equity interest in the Company in an effort
to preserve working capital. However, there is no assurance that
such endorsements can be obtained or that they can be obtained on
terms favorable to the Company.
Coincident with its marketing efforts, management will be
refining manufacturing and production of its merchandise. An
initial inventory of merchandise was produced through subcontract
arrangements brokered by independent third parties. Merchandise
produced under such arrangement was utilized primarily to test-
market the Company's business plan and logo. Future efforts will
be directed to finding a single source of supply to manufacture
the Company's merchandise to its individual specifications.
Depending upon the results of its marketing efforts,
management anticipates production of merchandise in lots of
approximately $50,000. Such amount should provide a sufficient
source of supply while preserving the Company's working capital.
Proceeds from the anticipated sale of this inventory will be used
to purchase additional merchandise for resale. The product line
will be modified and expanded according to customer requests and
as the market dictates. The Company may also purchase merchandise
from independent manufacturers to supplement its Full Tilt Apparel Line.
The Company has very limited revenues to date. Accordingly,
it is dependent on the proceeds of the private placement and
future sales to continue beyond the next twelve months.
Management is unable to predict with any degree of certainty,
when, if ever, significant revenues can be anticipated.
Liquidity and Capital Resources
June 30, 1998 The Company's working capital increased
from December 31, 1997 to June 30, 1998, from $15,791 to
$183,643, an increase of $167,852. Substantially all of this
increase resulted from financing activities conducted by the
Company during the first six months of 1998. The Company's
operations continued to use, rather than provide cash.
Nonetheless, management is of the opinion that the Company has
sufficient working capital to continue for the next twelve
months.
The Company completed two private placements during the six
months ended June 30, 1998. In April, the Company sold 50,000
shares of a newly created series of Preferred Stock to a single,
accredited investor in a transaction exempt from the registration
requirements of the 1933 Act. The Series A Preferred Stock was
issued at a price of $1 per share and maintains a preference in
liquidation over the Common Stock equal to $1 per share. The
Series A Preferred Stock accrues dividends at the rate of 10% per
annum during the first two years following issuance, which
dividend is cumulative. During the third through fifth years in
which the Series A Preferred Stock is outstanding, the holder is
entitled to 3.75% of the net profits of the Company. The Company
may redeem this Preferred Stock at any time following notice to
the holder for an amount equal to the issue price, plus any
accrued but unpaid dividends. The Series A stock is also
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convertible into Common Stock of the Company at the option of the
holder. For a more complete description of the Series A
Preferred Stock, see "Item 8. Description of Securities."
The Company also completed a private placement to a small
group of investors pursuant to Regulation D, Rule 504 of the 1933
Act. The Company sold an aggregate of 21,140 units ("Units") for
aggregate gross proceeds of $211,400. Each Unit sold in the
offering consisted of 10 shares of Common Stock and 5 Common
Stock Purchase Warrants (the "Warrants"). Each Warrant, in turn,
enables the holder to acquire an additional share of Common Stock
for an exercise price of $2 per share through and including April
30, 1999. As a result of these two offerings, the Company
received $261,400 from financing activities.
Proceeds from the offerings will be used to finance
acquisition of inventory and the Company's other operating
expenses. The Company's only obligations at June 30, 1998 were
accounts payable and other accrued expenses in the aggregate
amount of $28,394. Management anticipates that the existing
capital resources will be sufficient for the next twelve months.
However, it is not anticipated that the Company will generate
cash from operations until 1999 or thereafter. Accordingly, the
Company may continue to require capital from outside sources to
finance operations.
December 31, 1997. At December 31, 1997, the Company had
working capital of $15,791, consisting of current assets of
$37,027 and current liabilities of $21,236. As the Company
anticipates subcontracting all of its manufacturing to
independent third parties, it had no commitments for major
capital expenditures such as plant or equipment. The Company's
greatest need for working capital in the year ending December 31,
1998 is marketing, advertising, general and administrative
expenses, together with financing of inventory to be acquired
from third parties.
Current assets at December 31, 1997 consisted of cash and a
stock subscription receivable. The subscription receivable was
paid in January, 1998. Current liabilities consisted of accounts
payable of $16,043, accrued salaries of $2,500 and payroll taxes
payable. All of those liabilities were paid or satisfied during
the first half of 1998.
All of the financing necessary to sustain the Company during
the period from inception through December 31, 1997 was obtained
from equity investments by the Company's officers and directors.
The Company sold an aggregate of 3,500,000 shares of Common Stock
during that time for gross proceeds of $70,000. All of that
stock was sold pursuant to exemptions from the registration
requirements of Federal and state securities laws. Of the
$70,000 obtained from the investors, $41,322 was used in
operations, approximately $2,400 for the acquisition of equipment
and the balance remained as working capital at December 31, 1997.
The Company also endeavored to conduct a private placement
pursuant to Regulation D, Rule 504 of the 1933 Act during the
fall of 1997, but determined to terminate the offering and
restructure it in 1998.
Statement of Operations
Six Months Ended June 30, 1998 In the six month period
ended June 30, 1998, the Company realized a net loss of $93,228,
or $0.03 per share, on total revenues of $4,292. From inception
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(June 30, 1997) through June 30, 1998, the Company realized a net
loss of $145,840. Management anticipates the Company will
continue to incur losses until such time, if ever, the Company's
revenue can be increased to cover all of its general and
administrative expenses.
General and administrative expenses for the six month period
ended June 30, 1998 increased significantly from the period from
inception through December 31, 1997. Advertising expenses
increased to $33,743 for the six month period ended June 30,
1998, an increase of $33,393. This reflects a change in emphasis
by the Company from organizational efforts to marketing and
promotion of its product line. Consulting fees increased $12,500
from the period ended December 31, 1997 to the six month period
ended June 30, 1998, as the Administrative Services Agreement
became effective January 1, 1998. Salaries increased slightly,
from $20,000 for the period ended December 31, 1997 to $30,000
for the six month period ended June 30, 1998, as the Company's
officers began devoting full-time to the Company's affairs.
Professional fees associated with organization of the
Company and audit expenses decreased from the period ended
December 31, 1997 to the period ended June 30, 1998. However,
the Company will continue to incur such fees in the foreseeable
future as a result of filing this Registration Statement and its
anticipated status as a public reporting entity.
The Company remained in the development stage through June
30, 1998. While the Company received revenue from the sale of
its product line, such sales were extremely limited and made on a
promotional basis. With the increased capital available as a
result of the recent private placements, managements hopes the
Company will increase its marketing and advertising efforts, and
stimulate interest in the Apparel Line. However, as of the date
of filing this Registration Statement, the Company has no
existing orders or backlog for merchandise.
Period from Inception through December 31, 1997
During the period from inception to December 31, 1997, the
Company realized a net loss of $52,612 or $.02 per share on no
revenues and expenses of $52,547.
The Company's fixed expenses for the twelve months ending
July 30, 1999 are approximately $90,000. This includes $2,500
per month pursuant an Administrative Services Agreement under
which the Company occupies its executive and administrative space
and receives administrative assistance, together with $2,500 per
month each to the President and Vice President of the Company.
Significant variable expenses include travel and entertainment,
professional fees and miscellaneous office expenses. Following
registration of its securities with the Securities and Exchange
Commission and expenses associated with the accompanying audit,
management expects such expenses to continue, but at a lesser
amount.
During the period from inception through December 31, 1997,
the Company realized certain non-recurring expenses associated
with an abandoned securities offering. The Company recorded
$14,877 for fees and expenses in connection with that offering
which management determined to terminate due to reevaluation of
its business plan. The Company originally anticipated
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construction of a multi-sports facility in Colorado Springs; upon
evaluation of the cost and expense of constructing such a
facility and its available working capital, management determined
to postpone those efforts. Efforts to pursue that construction
may be revisited in fiscal 1999, working capital permitting
Item 3. Description of Property
The Company has no properties and at this time has no
agreements to acquire any properties, except as herein mentioned.
The Company's executive and administrative offices are located at
5525 Erindale Drive, Suite 201, Colorado Springs, Colorado 80918.
This space is rented to the Company by MCM Capital Management,
Inc. as part of its Administrative Services Agreement.
MCM Capital Management, Inc. of Colorado Springs provides
office, storage and warehousing space, as well as administrative
assistance, under an Administrative Services Agreement, dated
January 1, 1998. The Company can use the office, consisting of
3,000 square feet, as their business address, for storage of the
Company's products, and for meeting facilities as needed.
Administrative services provided to the Company include record
and bookkeeping, secretarial and personnel services, and other
support functions normally and reasonably required in the
ordinary course of the Company's business, including interfacing
and providing information to outside professionals and
consultants, such as attorneys and accounts. This agreement
commenced January 1, 1998, for a term of 12 months and has a
service fee of $2,500 per month. (See Item 7. Certain
Relationships and Related Transactions).
Subject to the availability of sufficient working capital,
the Company has an option to purchase property consisting of
approximately two acres of real estate located in northwest
Colorado Springs from J. Fisher DeBerry, an affiliate of the
Company, upon which to construct the sports facility. This
real estate, located near the corner of Centennial and Garden
of the Gods Road, was acquired by Mr. DeBerry in anticipation
of constructing this sports facility. Subject to the receipt
of sufficient working capital, the property will be acquired by
the Company for the same price paid by Mr. DeBerry, along with
accrued interest to date. A portion of the purchase price will
be paid with debt financing anticipated to be acquired by the
Company.
Item 4. Security Ownership of Certain Beneficial Owners
and Management
As of the date of this Registration Statement, there were a
total of 3,126,261 shares of Common Stock and 50,000 Series A
Preferred Shares of the Company outstanding, the only classes of
voting securities of the Company currently outstanding. The
Common Stock and the Series A Preferred Shares vote together as a
single class, and each share is entitled to one vote.
The following tabulates holdings of Common Stock and Series
A Preferred Stock of the Company by each person who, holds of
record or is known by management of the Company to own
beneficially more than 5% of the voting securities outstanding
and, in addition, by all directors and officers of the Company
individually and as a group. There are no holders of Preferred
Stock of the Company who own beneficially more than 5% of the
voting securities outstanding. The table does not reflect up to
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1,000,000 shares of Common Stock underlying the Company's Stock
Option Plan or 105,700 shares of Common Stock underlying Warrants
currently exercisable at a price of $2.00 until April 13, 2000.
The shareholders listed below have sole voting and investment
power. The address of each of the beneficial owners is 5525
Erindale Drive, Suite 201, Colorado Springs, Colorado 80918.
All ownership of securities is direct ownership unless otherwise
indicated.
Name Number of Shares Percent of Voting Securities
Roger K. Burnett 704,618 22.5%
Joseph F. DeBerry 704,618 22.5%
J. Fisher DeBerry 800,000 25.6%
Bill M. Conrad(1) 323,125 10.3%
Raymond E. McElhaney(1) 245,625 7.9%
All Officers and
Directors as a Group
(5 persons) 2,777,986 88.8%
(1) Includes 5,625 shares held by MCM Capital Management,
Inc. of which Messrs. McElhaney and Conrad are officers, directors
and principal shareholders.
_____________________________
All of the individuals listed in the foregoing table are either
officers or directors of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The following individuals presently serve as officers and
directors of the Company.
Name Age Position
Roger K. Burnett 27 President, Chief
Executive Officer, Chief
Financial Officer and Director
J. Fisher DeBerry 58 Executive Vice President
and Director
Joseph F. DeBerry 27 Vice President, Secretary,
Treasurer and Director
Bill M. Conrad 41 Director
Raymond E. McElhaney 41 Director
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Messrs. Burnett, Joseph DeBerry, Conrad and McElhaney
should be considered "founders" and "parents" of the Company (as
such terms are defined by rule under the Securities Exchange Act
of 1934, as amended), inasmuch as each has taken initiative in
founding and organizing the business of the Company.
Messrs. Burnett, and Joseph DeBerry presently serve the
Company pursuant to written employment contracts, effective
September 1, 1997, for an initial term of 12 month terms which
shall continue thereafter on a year to year basis, unless
terminated by the Company or employee. Mr. Fisher DeBerry serves
at the will of the Board of Directors. All of the directors are
currently serving a term of office until the next annual meeting
of shareholders and until their successors are duly elected and
qualified, or until they resign or are removed. Each of the
foregoing individuals has served in his current position since
the Company's inception in June, 1997.
The following represents a summary of the business history
of each of the foregoing individuals for the last five years:
ROGER K. BURNETT. From 1991 to 1995, Mr. Burnett was a
member of the New York Yankees farm organization, playing short
stop at the Single A and Double A level of that organization.
In the off-season during those years, Mr. Burnett managed an
indoor multi-sports facility in Tulsa, Oklahoma, where he was
responsible for all phases of operation. His experience in that
position provided the impetus for organization of the Company.
He graduated from Stanford University, in Palo Alto, California,
with a Bachelor of Arts in Business, where he was a two time
Collegiate All-American at shortstop. In his position as
President, Mr. Burnett will be responsible for overseeing all of
the Company's activities and strategic planning for future
development.
J. FISHER DeBERRY. Fisher DeBerry has been the head
football coach for the Air Force Academy in Colorado Springs for
fourteen years. In that capacity, he oversees a staff of
assistant coaches, and together with the athletic director and
university president, is responsible for all decisions affecting
the football team. During his tenure with the Air Force Falcons,
Mr. DeBerry has compiled a record of 92 wins and 55 losses, ten
of his twelve teams having achieved a winning record and eight
receiving a bowl bid. Prior to his position as head football
coach, Mr. DeBerry was an assistant from 1980 to 1983. Mr.
DeBerry will assist in marketing and program development for the
Company.
JOSEPH F. DeBERRY. Mr. DeBerry also played professional
baseball from 1991 to 1995, as a member of the Cincinnati Reds
and New York Yankees farm organizations. His most recent
position was with the Kansas City Royals Double A farm
organization, which he concluded early in 1997.
During his two year assignment with the Yankees
organization, Mr. DeBerry was responsible for establishing and
overseeing weekly baseball camps with local area youths in
Albany, New York. In 1994, he co-founded "Connecticut Yankee
Court", a group of local underprivileged youths in Norwich,
Connecticut, who met bi-monthly with Yankee players for private
baseball instruction. Mr. DeBerry attended college at Clemson
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University where he was twice named to the College All-American
baseball team and participated in the 1991 College Baseball World
Series. Prior to that, he was a stand-out athlete at Air Academy
High School in Colorado Springs.
As Vice President of the Company, Mr. DeBerry will be in
charge of marketing, production and other day-to-day operations
of the Company.
BILL M. CONRAD. Mr. Conrad is active in a number of
business endeavors, where he serves primarily in the area of
corporate finance. He is presently vice-president, secretary,
treasurer and a director of Wallstreet Racing Stables, Inc., a
publicly traded Colorado corporation engaged in the acquisition,
training, racing and sale of thoroughbred race horses. He has
occupied that position since 1995. Mr. Conrad is the vice
president of privately-held MCM Capital Management, Inc., a
financial public relations company. From 1989 to early 1997, Mr.
Conrad was the vice president of corporate development, secretary
and a director of Consolidated Capital of North America, Inc., a
publicly traded corporation engaged in the real estate business.
RAYMOND E. McELHANEY. Mr. McElhaney also has a diverse
business background. He is presently president and a director of
Wallstreet Racing Stables, Inc. He is also president of MCM
Capital Management and was the president of Consolidated Capital
of North America, Inc. from its inception in 1987 to 1997.
Joseph DeBerry is the son of J. Fisher DeBerry. No other
family relationships exist between any of the officers and
directors of the Company.
Item 6. Executive Compensation
The following table is a summary of the compensation paid to
all executive officers of the Company during the period ended
December 31, 1997. No other executive officer receives
compensation of any kind. Except as listed below, there are no
other bonuses, other annual compensation, restricted stock awards
or stock options/SARs or any other compensation paid to the
executive officers. The fiscal year of the Company ends December
31.
Summary Compensation Table
Name and Position Period from inception Salary
(June 30, 1997)
through December 31
Roger K. Burnett 1997 $10,000
President, Chief Executive Officer,
Chief Financial Officer
Joseph F. DeBerry 1997 $10,000
Vice President, Secretary
and Treasurer
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Each of Messrs. Burnett and Joseph DeBerry presently serve
the Company pursuant to one year employment contracts effective
September 1, 1997. Pursuant to those contracts, each individual
is entitled to annual compensation in the amount of $30,000.
Each individual is also entitled to participate in health
insurance and other benefit plans maintained for the employees of
the Company, and to be reimbursed for reasonable out-of-pocket
expenses incurred on behalf of the Company. Such individuals are
also entitled to participate in the Non-Qualifying Stock Option
and Stock Grant Plan discussed below.
The Employment Agreements executed with Messrs. Burnett and
Joseph DeBerry are effective for a one year term and are
automatically renewable unless terminated by either party not
less than ninety days prior to the anniversary date. The
contract may also be terminated by the Company for cause, or by
the employee upon not less than sixty days advance written
notice.
Employees receive no additional compensation for their
services as directors of the Company. Directors are not
currently compensated, although each is entitled to be reimbursed
for reasonable and necessary expenses incurred on behalf of the
Company. The Company reserves the right to enter into
compensation arrangements with its directors in the future.
Stock Option Plan The Company has adopted a Non-
Qualified Stock Option and Stock Grant Plan (the "Plan") for the
benefit of key personnel and others providing significant
services to the Company. An aggregate of 1,000,000 shares of
Common Stock has been reserved for issuance under the Plan.
The Plan is administered by the Board of Directors, which
selects optionees and recipients of any stock grants, the number
of shares and the terms and conditions of any options or grants
to key persons defined in the Plan. In determining the value of
services rendered to the Company for purposes of awards under the
Plan, the Board considers, among other things, such person's
employment position and relationship with the Company, his duties
and responsibilities, ability, productivity, length of service or
association, morale, interest in the Company, recommendation by
supervisors and the value of comparable services rendered by
others in the community. All options granted pursuant to the
Plan are exercisable at a price not less than the fair market
value of the shares of Common Stock on the date of grant.
There is no taxable income to an optionee as a result of the
grant of a Non-Qualified Stock Option unless the grant is at less
than fair market value. However, an optionee incurs taxable
income upon the exercise of a Non-Qualified Stock Option based on
the difference between the fair value of the stock at the time of
exercise and the exercise price. The Company is not entitled to
a tax deduction upon the grant of a Non-Qualified Stock Option,
but is entitled to a tax deduction upon exercise corresponding to
the optionee's taxable income.
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There are no options outstanding under the Plan as of June
30, 1998.
Item 7. Certain Relationships and Related Transactions
Recent Private Financing The Company commenced its
capitalization on June 30, 1997 by issuing 700,00 shares of its
Common Stock each to Messrs. Burnett, Joseph DeBerry, Fisher
DeBerry and Anderson for aggregate consideration of $20,000, or
approximately $.007 per share. Messrs. McElhaney and Conrad,
the sole members of the Board of Directors not involved in that
transaction, approved the sale on behalf of the Company.
Subsequently, on July 10, 1997, Messrs. McElhaney and Conrad
acquired 250,000 shares of Common Stock each for aggregate
consideration of $10,000, or $.02 per share. That transaction
was approved by a majority of the disinterested directors at that
time.
Subsequently, in December, 1997, Messrs. Fisher DeBerry and
Conrad each acquired an additional 100,000 shares of Common
stock for aggregate consideration of $40,000, or $0.20 per share.
This transaction was also approved by a majority of the
disinterested directors.
Finally, on August 1, 1998, Messr. Anderson resigned his
postions as officer, director and employee of the Company, and
returned 600,000 shares to the Company treasury. Of the
remaining shares, 95,000 were transferred to Mr. Conrad, and
5,000 shares were retained by Mr. Anderson.
Miscellaneous The Company has executed an
Administrative Services Agreement with MCM Capital Management,
Inc. of Colorado Springs to assist with the Company's
administrative needs for the next twelve months. The Agreement
provides the Company with office, storage and warehouse space as
well as bookkeeping, secretarial and personnel services on an as-
needed basis for a period of one year at a rate of $2,500 per
month beginning January 1, 1998. Messrs. McElhaney and Conrad,
directors of the Company, are also officers, directors and
principal shareholders of MCM Capital Management, Inc.
The Company has an option, in the event the Company can
raise sufficient capital, to acquire property in Colorado Springs
from an affiliate of the Company for a purchase price of
$132,500, in order to construct its first sports facility. This
real estate, consisting of approximately two acres located in
northwest Colorado Springs near the corner of Centennial and
Garden of the Gods Road, was acquired by J. Fisher DeBerry,
Executive Vice President and a director of the Company, in
anticipation of constructing this sports facility. In the event
the Company acquires the property, it will be acquired by the
Company for the same price paid by Mr. DeBerry, along with
accrued interest to date. A portion of the purchase price would
be paid with debt financing anticipated to be acquired by the
Company.
In July, 1998, Messrs. Joseph DeBerry and Burnett each
acquired an additional 4,618 shares of Common Stock of the
Company for consideration of services rendered to the Company in
the months of May and June, 1998. Said consideration is in lieu
of salary payable under the Employment Agreements that Messrs.
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Joseph DeBerry and Burnett have entered into with the Company.
That transaction was approved by a majority of the disinterested
directors at that time.
In July, 1998, MCM Capital Management, Inc. acquired 5,625
Common Shares of stock of the Company for consideration of
service and satisfaction of accounts payable under the
Administrative Services Agreement, dated January 1, 1998, that
the Company has entered into with MCM Capital Management, Inc.,
of which Messrs. McElhaney and Conrad are officers, directors and
principal shareholders.
The Company is of the opinion that the foregoing
transactions were no less favorable than could have been obtained
from an unaffilated third party.
Item 8. Description of Securities
The Company's authorized capital consists of 25,000,000
shares of Common Stock, $.001 par value and 5,000,000 shares of
Preferred Stock, $.01 par value. The following description of
the Company's securities is qualified in its entirety by
reference to the Company's Articles of Incorporation and Articles
of Amendment to the Articles of Incorporation, copies of which
are available upon request to the Company.
Common Stock Each share of Common Stock is entitled
to one vote at all meetings of shareholders. All shares of
Common Stock are equal to each other with respect to liquidation
rights and dividend rights. There are no preemptive rights to
purchase any additional shares of Common Stock. The Articles of
Incorporation of the Company prohibit cumulative voting in the
election of directors. In the event of liquidation, dissolution
or winding up of the Company, holders of shares of Common Stock
will be entitled to receive on a pro rata basis all assets of the
Company remaining after satisfaction of all liabilities and all
liquidation preferences, if any, granted to holders of the
Company's Preferred Stock.
All of the Company's issued and outstanding Common Stock is
fully paid and non-assessable and is not subject to any future
call.
Preferred Stock The Articles of Incorporation and
Articles of Amendment to the Articles of Incorporation vest the
Board of Directors of the Company with authority to divide the
Preferred Stock into series and to fix and determine the relative
rights and preferences of the shares of any such series so
established to the full extent permitted by the laws of the State
of Colorado and the Articles of Incorporation in respect to,
among other things, (i) the number of shares to constitute such
series and the distinctive designations thereof; (ii) the rate
and preference of dividends, if any, the time of payment of
dividends, whether dividends are cumulative and the date from
which any dividend shall accrue; (iii) whether Preferred Stock
may be redeemed and, if so, the redemption price and the terms
and conditions of redemption; (iv) the liquidation preferences
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payable on Preferred Stock in the event of involuntary or
voluntary liquidation; (v) sinking fund or other provisions, if
any, for redemption or purchase of Preferred Stock; (vi) the
terms and conditions by which Preferred Stock may be converted,
if the Preferred Stock of any series are issued with the
privilege of conversion; and (vii) voting rights, if any.
Series A Preferred Stock As of the date of filing
this Registration Statement, a total of 150,000 shares were
designated Series A Preferred Stock, of which 50,000 are issued
and outstanding. All of those shares have an issue price and
preference on liquidation equal to $1.00 per share. The Series A
Preferred Shares accrue dividends at the rate of 10% per annum
during the first two years following issuance, which dividend is
payable in cash and is cumulative. During the third through
fifth year in which the Series A Preferred Shares are
outstanding, the holders are entitled to 3.75% of the net profits
of the Company, also payable in cash. The Company may redeem
this preferred stock at any time following notice to the holder
for an amount equal to the issue price, plus any accrued but
unpaid dividends.
The Series A Preferred Shares are convertible into Common
Stock of the Company at the option of the holder on a one for one
basis at any time up to the fifth anniversary of the issuance.
On the fifth anniversary, the Series A Preferred Shares
automatically convert into Common Stock of the Company. The
conversion rate is subject to adjustment in certain events,
including stock splits and dividends.
Holders of the Preferred Stock are entitled to one vote for
each share held of record. Holders of the Preferred Stock vote
with holders of the Common Stock as one class. Finally, all of
the Company's issued and outstanding Series A Preferred Shares are
fully paid, nonassessable and not subject to any future call.
Warrants In connection with an offering completed in
June, 1998, the Company issued 105,700 Warrants. Each Warrant
may be exercised by the holder thereof to purchase one share of
Common Stock of the Company at an exercise price of $2.00 per
share until April 13, 2000 ("Exercise Period") unless sooner
redeemed. Thereafter, the Warrants will expire, become void and
of no further force or effect, unless extended in the sole
discretion of the Company. The Company also reserves the right
to modify the exercise price. There is no assurance market
conditions will exist at any time during the Exercise Period such
that exercise of the Warrants will be practical; in fact, it is
not anticipated that a market for the Warrants will develop
during the exercise period.
Any decision to extend the Exercise Period of the Warrants
or change the exercise price will rest in the discretion of the
Company. In the event a decision is made to extend the Exercise
Period or change the exercise price, such notice shall be
delivered to holders by written notice not less than thirty days
prior to expiration of the Exercise Period. Upon expiration of
the Exercise Period, it is anticipated that any market which
might have existed for the Units and the Warrants will terminate.
The Warrants contain the usual anti-dilution provisions so
as to avoid dilution of the equity interest which is represented
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by the underlying Common Stock upon the occurrence of certain
events, such as stock dividends or splits. In the event of
liquidation, dissolution, or winding up of the Company, holders
of the Warrants will not be entitled to participate in the assets
of the Company. Holders of Warrants will have no voting,
preemptive, liquidation or other rights of a stockholder, and no
dividends will be declared on the Warrants.
The Warrants are redeemable at the election of the Company
at any time following detachment upon thirty days notice to the
holders at a redemption price of $.001 per Warrant. Notice of
the Company's decision to redeem the Warrants shall be given to
the holders by regular mail at the last known address maintained
by the Company's Warrant Agent. The failure of the holder of
such Warrants to purchase the Common Stock within the thirty day
period will result in such holders' forfeiture of the right to
purchase the Common Stock underlying the Warrants.
The Warrants may not be exercised unless the holder resides
in a state where such exercise will be permitted under applicable
state securities laws. The Company anticipates that the issuance
of the Common Stock underlying the Warrants will be permitted in
each jurisdiction wherein sale of the Units is qualified.
However, subsequent transfer of the Warrants may result in the
inability of the holder to exercise the Warrants.
Transfer Agent The Company's transfer agent for the Common
Stock and Warrant Agent for the Warrants is Securities Transfer
Corporation. Its address and telephone number are 16910 Dallas
Parkway, Suite 100, Dallas, Texas 75248; (972) 447-9890.
Dividends No dividend has been declared or paid by the
Company on its shares of Common Stock since inception and no
dividends on shares of Common Stock are contemplated in the
foreseeable future. Any earnings of the Company will be
reinvested in the Company's business.
PART II
Item 1. Market Price for Common Equity and Related Stockholder
Matters.
There is no trading market for the Company's Common Stock at
present and there has been no trading market to date. Management
has not undertaken any discussions, preliminary or otherwise,
with any prospective market maker concerning the participation of
such market maker in the aftermarket for the Company's
securities, but the Company may initiate such discussions in the
future following receipt of an effective date for this
Registration Statement.
Market Price The Company's Common Stock is not quoted
at the present time.
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Holders There are 58 holders of the Company's Common
Stock as of June 30, 1998.
Penny Stock Regulation Broker-dealer practices in
connection with transactions in "Penny Stocks" are regulated by
certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a
price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on the NASDAQ
system). The penny stock rules require a broker-dealer, prior to
a transaction in a penny stock not otherwise exempt from the
rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the risk associated
with the penny stock market. The broker-dealer must also provide
the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson
in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account.
In addition, the penny stock rules generally require that prior
to a transaction in a penny stock, the broker-dealer must make a
written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may
have the effect of reducing the level of trading activity in the
secondary market for a stock that becomes subject to the penny
stock rules.
When the Registration Statement becomes effective and the
Company's securities become registered, the stock will likely
have a trading price of less than $5.00 per share and will not be
traded on any exchanges. Therefore, the Company's stock will
become subject to the penny stock rules and investors may find it
more difficult to sell their securities, should they desire to do
so.
Dividends The Company has never paid or declared any
dividend on its Common Stock and does not anticipate paying cash
dividends in the foreseeable future.
Item 2. Legal Proceedings.
The Company knows of no legal proceeding to which it is a
party or to which any of its property is subject which are
pending, threatened or contemplated or any unsatisfied judgments
against the Company.
Item 3. Changes in and Disagreements With Accountants.
The Company has not changed it accountants, Kish, Leake &
Associates, P.C. 7901 East Belleview Ave, Suite 220, Englewood,
Colorado 80111 since its formation and there are no disagreements
with the findings of said accountants.
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Item 4. Recent Sales of Unregistered Securities.
In May and June, 1998 the Company received a total of
$211,400 from the sale of 211,400 shares of Common Stock and
105,700 Warrants of the Company, in an offering conducted by the
executive officers and directors of the Company pursuant to the
exemptions from registration provided under Section 3(b) of the
Securities Act of 1933, as amended (hereinafter referred to as
the "Act"), and Rule 504 of Regulation D promulgated thereunder.
Additionally, the Company received a total of $50,000 from the
sale of 50,000 shares of Preferred Stock of the Company to two
shareholders who are residents of the State of Colorado pursuant
to an offering conducted by the executive officers and directors
of the Company during April, 1998. The Company claimed the
exemptions from registration in connection with the offering
provided under Section 4(2) of the Act.
In connection with the first non-public offering of the
Company's securities referenced above, the Company relied on
Regulation D, Rule 504 of the 1933 Act for an exemption from the
registration requirements for such securities. The shares sold
in that offering were issued pursuant to a private placement
memorandum. Each investor in this offering was required to meet
or exceed certain conditions contained within the Private
Placement Memoranda which were included to ensure that the
investor was qualified to purchase such securities. Each
investor was able to fend for himself in the transaction.
Furthermore, each investor was furnished with information
concerning the proposed operation of the Company and each had the
opportunity to verify the information supplied. The securities
issued to said investors did not contain a legend restricting the
transfer of said shares.
In connection with the offering not covered under Regulation
D, Rule 504, the Company relied on exemptions from the
registration requirements contained at Section 4(2) and/or 3(b)
of the 1933 Act. Each of the purchasers was a sophisticated
investor and the Company obtained a representation from such
individuals or entities to that effect. The Company obtained a
representation from each investor of his intent to acquire the
shares of the Company for the purpose of investment only and not
with a view toward resale or redistribution thereof.
Item 5. Indemnification of Directors and Officers.
Article X of the Company's Articles of Incorporation contain
provisions providing for the Indemnification if directors and
officers of the Company as follows:
The Board of Directors of the Corporation shall have the
power to:
Section 1. Indemnify any director, officer, employee or
agent of the Corporation to the fullest extent permitted by the
Colorado Business Corporation Act as presently existing or as
hereafter amended.
Section 2. Authorize payment of expenses (including
attorney's fees) incurred in defending a civil or criminal
action, suit or proceeding in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay
24
<PAGE>
such amount unless it is ultimately determined that he is
entitled to be indemnified by the Corporation as authorized in
this Article X.
Section 3. Purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of
the Corporation or who is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status
as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this
Article X.
The indemnification provided by this Article X shall not be
deemed exclusive of any other rights to which those indemnified
may be entitled under these Articles of Incorporation, and
Bylaws, agreement, vote of shareholders or disinterested
directors or otherwise, and any procedure provided for by any of
the foregoing, both as to action in his official capacity and as
to action in another capacity while holding such office, shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
25
<PAGE>
PART F/S
Financial Statements.
The following financial statements are attached to this
Registration Statement and filed as a part thereof.
1) Table of Contents - Financial Statements
2) Independent Auditor's Report
3) Balance Sheet
4) Income Statement
5) Statement of Stockholders' Equity
6) Statement of Cash Flows
7) Notes to Financial Statements
26
<PAGE>
PART III
Item 1. Exhibit Index
No. Sequential
(1) Not Applicable
(2) Charters and by-laws
2.1 Articles of Incorporation, as filed with the Colorado
Secretary of State, dated June 30, 1997
2.2 Articles of Amendment to the Articles of Incorporation,
as filed with the Colorado Secretary of State, dated
April 15, 1998
2.3 Bylaws
(3) Instruments defining rights of security holders
3.1 Form of Warrant Certificate
(4) Not applicable
(5) Not applicable
(6) Material Contracts
6.1 Employment Agreement, by and between the Company and Roger
K. Burnett, dated August 5, 1997
6.2 Employment Agreement, by and between the Company and Joseph
F. DeBerry, dated August 5, 1997
6.3 Non-Qualified Stock Option and Stock Grant Plan, dated
July 1, 1998
6.4 Stock Option Agreement
6.5 Real Estate Purchase Agreement, by and between the Company
and James Fisher DeBerry, dated August 4, 1997
6.6 Administrative Services Agreement, dated January 1, 1998
(7) Not applicable
(8) Not applicable
27
<PAGE>
(9) Not applicable
(10) Not applicable
28
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
____________________________________________________________________________
Full Tilt Sports, Inc.
Date: 8/24/98
____________________________
By: /s/ Roger K. Burnett
______________________________
Roger K. Burnett, President
<PAGE>
FULL TILT SPORTS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
With Independent Auditors' Report
For The Period June 30, 1997(Inception) Through December 31, 1997
And The Six Month Interim Period Ended June 30, 1998
(Unaudited)
<PAGE>
FULL TILT SPORTS, INC.
(A Development Stage Company)
TABLE OF CONTENTS
Page
Independent Auditors' Report F-1
Balance Sheet F-2
Income Statement F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6 to F-10
<PAGE>
Independent Auditors' Report
----------------------------
We have audited the accompanying balance sheet of Full Tilt
Sports, Inc.(A Development Stage Company), as of December 31,
1997, and the related statements of income, shareholders' equity
and cash flows for the period June 30, 1997 (inception) through
December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Full Tilt Sports, Inc. at December 31, 1997 and the results of
its operations and its cash flows for the period June 30, 1997
(inception) through December 31, 1997 in conformity with
generally accepted accounting principles.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
July 21, 1998
F-1
<PAGE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Balance Sheet
- ------------------------------------------------------------------------
Unaudited Audited
June December
30, 1998 31, 1997
-------- --------
ASSETS
Current Assets
Cash $207,074 $26,291
Accounts Receivable 4,304 0
Stock Subscriptions Receivable 0 10,000
Deposits 50 50
Organiztional Costs (Less amortization of $76) 609 686
--- ---
Total Current Assets 212,037 37,027
------- ------
Property, Plant, and Equipment
Funiture and Equipment 2,396 2,396
----- -----
Total Property, Plant, and Equipment 6,845 2,396
Less Accumulated Depreciation (1,189) (799)
------- ------
Net Property, Plant, and Equipment 5,656 1,597
----- -----
TOTAL ASSETS 217,693 38,624
======= ======
LIABILITIES
Current Liabilities
Accounts Payable 23,495 16,043
Accrued Salaries 0 2,500
Other Accrued Expenses 4,898 2,693
----- -----
Total Current Liabilities 28,393 21,236
------ ------
STOCKHOLDERS' EQUITY
Preferrred Stock (Authorized 5,000,000 Shares
Par Value $.01; 50,000 Shares Issued And
Outstanding (Unaudited) ; 0 Shares Issued
and Outstanding 500 0
Common Stock (Authorized 25,000,000 Shares
Par Value $.001; 3,726,261 Shares Issued and
Outstanding (Unaudited); 3,500,000 Shares
Issued and Outstanding) 3,726 3,500
Additional Paid In Capital 330,914 66,500
Retained Deficit (145,840) (52,612)
--------- --------
Total Stockholders' Equity 189,300 17,388
------- ------
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY $217,693 $38,624
======== =======
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-2
<PAGE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Income Statement
- -------------------------------------------------------------------------------
Unaudited Audited Unaudited
Six Month June 30, 1997 June 30, 1997
Interim Period (Inception) (Inception)
Ended Through Through
June December June
30, 1998 31, 1997 30, 1998
-------- -------- --------
REVENUE $4,292 $0 $4,292
------ -- ------
COST OF GOODS SOLD 4,002 0 4,002
----- - -----
GROSS PROFIT 290 0 290
--- - ---
GENERAL AND ADMINISTRATIVE EXPENSES
Advertising 33,743 350 34,093
Amortization 76 76 152
Bank Charges 0 160 160
Administrative Services 15,000 2,500 17,500
Depreciation 390 799 1,189
Filing and Recording Fees 15 251 266
Offering Expense 0 14,877 14,877
Office Expense 3,883 1,651 5,534
Payroll Tax 2,978 1,766 4,744
Professional Fees 4,104 8,476 12,580
Salary 30,000 20,000 50,000
Telephone 1,380 1,275 2,655
Travel 2,066 366 2,432
----- --- -----
Total General and Administrative Expense 93,635 52,547 146,182
------ ------ -------
INCOME (LOSS) FROM OPERATIONS (93,345) (52,547) (145,892)
-------- -------- ---------
OTHER INCOME (EXPENSE)
Interest Income 172 0 172
Interest (Expense) (55) (65) (120)
---- ---- -----
Total Other Income (Expense) 117 (65) 52
--- ---- --
INCOME (LOSS) BEFORE TAXES (93,228) (52,612) (145,840)
-------- -------- ---------
Provision for Income Taxes 0 0 0
- - -
NET (LOSS) ($93,228) ($52,612) ($145,840)
========= ========= ==========
Basic (Loss) Per Common Share ($0.03) ($0.02)
Weighted Average Shares Outstanding 3,537,710 3,333,333
========= =========
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-3
<PAGE>
<TABLE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Statement of Shareholders Equity
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Preferred Stock Common Stock
Number of Number of Capital Paid Capital Paid
Common Preferred Preferred Common In Excess Of In Excess Of Accumulated
Shares Shares Stock Stock Par Value Par Value (Deficit) Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
June 30, 1997 0 0 $0 $0 $0 $0 $0 $0
Issuance Of Common
Stock
July 05, 1997 For Cash
$.0071 Per Share 2,800,000 0 2,800 17,200 20,000
July 07, 1997 For Cash
@ $.02 Per Share 500,000 0 500 9,500 10,000
December 1997 For Cash
@ $.20 Per Share 200,000 200 39,800 40,000
Net (Loss)
December 31, 1997 (52,612) (52,612)
--------- - - ----- ------ -------- --------
Balance At
December 31, 1997 3,500,000 0 0 3,500 0 66,500 (52,612) 17,388
April 14, 1998 For
Cash @ $1 Per Share 50,000 500 0 49,500 50,000
Private Stock Offering:
June 30, 1998 For Cash
@ $1 Per Share 211,400 211 211,189 211,400
(Less Deferred Offering
Costs) (11,121) (11,121)
June 30, 1998 Services
Valued @ $1.00 14,861 15 14,846 14,861
Unaudited (Loss) at
June 30, 1998 (93,228) (93,228)
--------- ------ ---- ------ ------- -------- -------- --------
Unaudited Balance at
June 30, 1998 3,726,261 50,000 $500 $3,726 $49,500 $281,414 ($145,840) $189,300
========= ====== ==== ====== ======= ======== ========== ========
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-4
<PAGE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Statement of Cash Flows
- --------------------------------------------------------------------------------
Unaudited Audited Unaudited
Six Month June 30, 1997 June 30, 1997
Interim Period (Inception) (Inception)
Ended Through Through
June December June
30, 1998 31, 1997 30, 1998
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) ($93,228) ($52,612) ($145,840)
Adjustments to Reconcile Net Loss to Net
Cash Provided By Operating Activities
Items Not Affecting Cash Flows:
Depreciation Expense 390 799 1,189
Amortization Expense 76 76 152
(Increase) In Accounts Receivable (4,304) 0 (4,304)
(Increase) Decrease In Stock Subscriptions
Receivable 10,000 (10,000) 0
(Increase) In Other Assets 0 (812) (812)
Increase In Accounts Payable 7,453 16,043 23,496
Increase (Decrease) In Accured Salaries (2,500) 2,500 0
Increase In Other Accrued Expenses 2,205 2,693 4,898
Net Cash Used By Operating Activities (79,908) (41,313) (121,221)
-------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (4,449) (2,396) (6,845)
------- ------- -------
Net Cash Used By Investing Activities (4,449) (2,396) (6,845)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock 215,140 70,000 285,140
Issuance of Preferred Stock 50,000 0 50,000
------ - ------
Net Cash Provided By Financing Activities 265,140 70,000 335,140
------- ------ -------
Net Increase In Cash 180,783 26,291 207,074
Cash At Beginning Of Year 26,291 0 0
------ -
Cash At End Of Year $207,074 $26,291 $207,074
======== ======= ========
Non-Cash Activities:
Common Stock Issued For Services $14,861 $0 $14,861
======= == =======
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-5
<PAGE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Period June 30, 1997 (Inception) Through December 31, 1997
- ------------------------------------------------------------------
Note 1 - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------
Organization
On June 30, 1997 Full Tilt Sports, Inc. (the Company) was
incorporated under the laws of Colorado. The Company's primary
purposes are to develop and market the Full Tilt line of clothing
apparel and secondly to organize and develop one or more indoor
multi-sport facilities in the United States.
Developmental Stage
The Company is currently in the developmental stage and has no
significant revenues from operations to date.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Depreciation
Property and equipment is depreciated using the straight line
method over the estimated economic lives ranging from 3 to 7
years.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company
considered demand deposits and highly liquid-debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
Cash paid for interest during the year ended December 31, 1997
was $-0-. Cash paid for income taxes for the year ended December
31, 1997 was $ -0-. There were no noncash investing and
financing transactions.
F-6
<PAGE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Period June 30, 1997 (Inception) Through December 31, 1997
- ------------------------------------------------------------------
Note 1 - Organization and Summary of Significant Accounting Policies (Cont'd)
- -----------------------------------------------------------------------------
Net Income (Loss) Per Common Share
The net income (loss) per common share is computed by dividing
the net income (loss) for the year by the weighted average number
of common shares outstanding at December 31, 1997.
Advertising
Advertising is expensed when incurred.
Note 2 - Equity
- ---------------
The Company initially authorized 30,000,000 shares of stock of
which 5,000,000 shares are $.01 par value preferred stock and
25,000,000 shares are $.001 par value common stock. On July 05,
1997 the Company issued 2,800,000 shares of common stock for $.0071
per share or $20,000. On July 07, 1997 the Company issued 500,000
shares of common stock for $.02 per share or $10,000. On December 31,
1997 the Company issued 200,000 shares of common stock for $.20 per
share or $40,000.
The Board of Directors is authorized to divide the class of
preferred shares into series and to fix and determine the
relative rights and preferences of those shares.
In September 1997 the Company offered to sell up to 500,000
shares of common stock for $1.00 per share, based on a best
efforts basis to Colorado residents only. The minimum is 300,000
shares and a maximum of 500,000 shares for a total offering of
$500,000. The shares of common stock were to be issued pursuant to
an exemption from registration under Section 3(b) and Regulation
D, Rule 504, of the Securities Act of 1933, as amended, and from
an exemption to registration provided by Section 11-51-308(l)(p)
of the Colorado Securities Act.
The private placement was terminated without receiving any funds,
and the offering costs were deducted as part of the operation in
1997.
F-7
<PAGE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Period June 30, 1997 (Inception) Through December 31, 1997
- ------------------------------------------------------------------
Note 3 - Stock Option Plan
- --------------------------
The Company has adopted a Non-Qualified Stock Option and Stock
Grant Plan for the benefit of key personnel and others providing
significant services to the Company. An aggregate of 1,000,000
shares of common stock has been reserved for issuance under this
plan. There are no options outstanding under this plan as of
December 31, 1997.
Note 4 - Income Taxes
- ---------------------
The Company follows Financial Accounting Standards Board
Statement No. 109, "Accounting For Income Taxes" (SFAS #109),
which requires, among other things, an asset and liability
approach to calculating deferred income taxes. The components of
the deferred income tax assets and liabilities arising under FASB
Statement No. 109 were as follows:
Deferred tax asset $10,522
Valuation allowance 10,522
-------
$ -0-
=======
The net change in the valuation allowance for the year ended
December 31, 1997 was $10,522.
The types of temporary differences between the tax basis of
assets and their financial reporting amounts that give rise to a
significant portion of the deferred tax asset are as follows:
Temporary Tax
Difference Effect
---------- ------
Net operating loss carry forward $52,612 $10,522
======= =======
The net operating loss carry forward will expire in the year 2012.
Note 5 - Related Party Events
- -----------------------------
The Company has executed an Administrative Service Agreement with
a company owned by directors of the Company for $2,500 per month
for a twelve year period beginning January 1, 1998.
F-8
<PAGE>
Full Tilt Sports
(A Development Stage Company)
Notes To Financial Statements
For The Period June 30, 1997 (Inception) Through December 31, 1997
- ------------------------------------------------------------------
Note 5 - Related Party Events (continued)
- -----------------------------------------
The Company has an option to acquire property purchased by an
officer/director.
The Company entered into employment agreements for $30,000 per
year with two of its officers. The initial term of this
agreement commenced September 1, 1997 and will terminate on
August 31, 1998, and shall continue thereafter on a year to year
basis unless terminated by the Company.
Note 6 - Subsequent Events
- --------------------------
The Company plans to file a form 10-SB with the Securities and
Exchange Commission to register its common stock under the
Securities and Exchange Act of 1934.
In April 1998 the Company offered to sell up to 50,000 units (the
"Units") at $10.00 per Unit, or $1.00 per share, based on a best
efforts basis to Colorado residents only. Each Unit is comprised
of 10 shares of $.001 par value common stock and 5 common stock
purchase warrants. The warrants can be exercised at anytime after
the offering to purchase 1 share of common stock for $2.00 until
April 13, 2000. The minimum is 15,000 Units and a maximum of
50,000 Units for a total offering of $500,000. The shares of
common stock contained in the Units are to be issued pursuant to
an exemption from registration under Section 3(b) and Regulation
D, Rule 504, of the Securities Act of 1933, as amended, and to an
exemption to registration provided by Section 11-51-308(l)(p) of
the Colorado Securities Act.
In June 1998 the Company completed the offering and sold 21,140
units including 211,400 shares of common stock and 105,700
warrants for $211,400. After deferred offering costs of $11,121,
the Company netted $200,068 from the offering.
In June 1998 the Company issued 14,861 shares of common stock
valued at $1 per share for services rendered to the Company.
F-9
<PAGE>
Full Tilt Sports, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Period June 30, 1997 (Inception) Through December 31, 1997
- ------------------------------------------------------------------
Note 6 - Subsequent Events (continued)
- --------------------------------------
In April 1998 the Articles of Incorporation were amended to
authorize the issuance of 150,000 shares of Series A Voting
Convertible Preferred Stock to be issued at the discretion of the
Board of Directors for $1 per share. The Series A Voting
Convertible Preferred Stock has senior preferential fixed
dividends at the rate of 10% per annum ($.10 per year) pro rated
to the date of issuance, for a period of 24 months after
issuance, payable annually on or before December 31 of each such
calendar year before any dividend shall be declared or paid upon
or set apart for the Common Stock. Beginning on the first day of
the 25th month and continuing until the expiration of 60 months
from the date of issuance, unless sooner converted, the dividend
shall be calculated as 3.75% of the "net profits" of the
Corporation and payable annually on or before 90 days from the
closing of the Corporation's fiscal year. The Series A Voting
Convertible Preferred Stock automatically converts to common
stock in 5 years from the date of issuance. The conversion rate
will be subject to adjustments in certain events, including stock
splits and dividends.
On April 14, 1998, the Company sold 50,000 shares of series A
preferred stock for $50,000 or $1.00 per share.
Note 7 - Unaudited Financial Information
- ----------------------------------------
The information furnished herein for the six month interim period
ended June 30, 1998, was taken from the books and records of the
Company without audit. The Company believes, however, that is
has made all adjustments necessary to reflect properly the
results of operations for the six month interim period ended June
30, 1998. The adjustments consist only of normal reoccurring
accruals. The results of operations for the six month interim
period ended June 30, 1998, are not necessarily indicative of the
results to be expected for the year ended December 31, 1998.
F-10
PART III
EXHIBIT 2.1
ARTICLES OF INCORPORATION
DATED
JUNE 30, 1997
<PAGE>
ARTICLES OF INCORPORATION
OF
FULL TILT SPORTS, INC.
---------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
Incorporator, being a natural person of the age of eighteen years
or more, and desiring to form a body corporate under the laws of
the State of Colorado, does hereby sign, verify and deliver in
duplicate to the Secretary of State of the State of Colorado
these Articles of Incorporation:
ARTICLE I. Name. The Name of the Corporation is FULL
TILT SPORTS, INC.
ARTICLE II. Duration. The Corporation shall have perpetual
duration.
ARTICLE III. Principal Office. The principal office of the
Corporation in the State of Colorado shall be located at 5525
Erindale Drive, Suite 201, Colorado Springs, Colorado 80918, and
thereafter at such location as the Board of Directors may
determine.
ARTICLE IV. Purposes. The nature of the business of the
Corporation and the objects and purposes and business thereof
proposed to be transacted, promoted or carried on are to engage
in any lawful act or activity for which corporations may be
organized under the Colorado Business Corporation Act.
ARTICLE V. Capital Structure.
Section 1. Authorized Capital. The total number of
shares of all classes which the Corporation shall have authority
to issue is 30,000,000 of which 5,000,000 shall be Preferred
Shares, par value $.01 per share, and 25,000,000 shall be Common
Shares, par value $.001 per share, and the designations,
preferences, limitations and relative rights of the shares of
each class are as follows:
Section 2. Preferred Shares. The Corporation, by
resolution of its Board of Directors, may divide and issue the
Preferred Shares in series. Preferred Shares of each series when
issued shall be designated to distinguish them from the shares of
all other series. The Board of Directors is hereby expressly
vested with authority to divide the class of Preferred Shares
into series and to fix and determine the relative rights and
preferences of the shares of any such series so established to
the full extent permitted by these Articles of Incorporation and
the Colorado Business Corporation Act in respect to the
following:
A. The number of shares to constitute such series,
and the distinctive designations thereof;
B. The rate and preference of dividends, if any, the
time of payment of dividends, whether dividends are
cumulative and the date from which any dividend shall
accrue;
1
<PAGE>
C. Whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
D. The amount payable upon shares in event of
involuntary
liquidation;
E. The amount payable upon shares in event of
voluntary liquidation;
F. Sinking fund or other provisions, if any, for
the redemption or purchase of shares;
G. The terms and conditions on which shares may
be converted, if the shares of any series are issued
with the privilege of conversion;
H. Voting powers, if any; and
I. Any other relative rights and preferences of
shares of such series, including, without limitation,
any restriction on an increase in the number of shares
of any series theretofore authorized and any limitation
or restriction of rights or powers to which shares of
any future series shall be subject.
Section 3. Common Shares.
A. The rights of holders of Common Shares to
receive dividends or share in the distribution of
assets in the event of liquidation, dissolution or
winding up of the affairs of the Corporation shall be
subject to the preferences, limitations and relative
rights of the Preferred Shares fixed in the resolution
or resolutions which may be adopted from time to time
by the Board of Directors of the Corporation providing
for the issuance of one or more series of the Preferred
Shares.
B. The holders of the Common Shares shall be
entitled to one vote for each Common Share held by them
of record at the time for determining the holders
thereof entitled to vote.
ARTICLE VI. Board of Directors. The business and affairs
of the Corporation shall be managed by the Board of Directors.
The number of directors constituting the Board of Directors shall
be fixed in the manner provided in the Bylaws of the Corporation,
subject to the limitation that the initial Board of Directors of
the Corporation shall consist of six persons. Those persons
shall serve as directors of the Corporation until the first
annual meeting of shareholders or until their successors shall
have been elected and qualified. The names and addresses of the
initial Board of Directors are as follows:
2
<PAGE>
Rodger K. Burnett J. Fisher DeBerry
5525 Erindale Drive, Suite 201 5525 Erindale Drive, Suite 201
Colorado Springs, Colorado 80918 Colorado Springs, Colorado 80918
Joseph F. DeBerry Stephen K.Anderson
5525 Erindale Drive, Suite 201 5525 Erindale Drive, Suite 201
Colorado Springs, Colorado 80918 Colorado Springs, Colorado 80918
Raymond E. McElhaney Bill M. Conrad
5525 Erindale Drive, Suite 201 5525 Erindale Drive, Suite 201
Colorado Springs, Colorado 80918 Colorado Springs, Colorado 80918
In accordance with the Bylaws of the Corporation, the Board
of Directors may thereupon be divided into classes, each class to
be as nearly equal in number as possible, with the term of office
of directors of the first class to expire at the first annual
meeting of shareholders after their election, and the terms of
the successive classes expiring at successive annual meetings of
shareholders thereafter. At each annual meeting following such
classification and division of the members of the Board of
Directors, a number of directors equal to the number of
directorships in the class whose term expires at the time of such
meeting shall be elected to hold office for a term of years equal
to the number of classes, and such term shall expire at the
annual meeting held during the final year of the term.
ARTICLE VII. Powers of Board of Directors. The following
provisions are inserted for the management of the business and
for the conduct of the affairs of the Corporation, and its is
expressly provided that they are intended to be in furtherance
and not in limitation or exclusion of the powers conferred by the
statutes of the State of Colorado.
Section 1. The number of directors of the Corporation shall
be fixed from time to time by, or in the manner provided in, the
Bylaws, but in no case shall the number be less than three.
Section 2. The Board of Directors shall have the power from
time to time to fix and to determine and vary the amount of the
working capital of the Corporation and to direct and determine
the use and disposition of any surplus or net profits over and
above the capital as determined pursuant to, and subject to, the
provisions of the Colorado Business Corporation Act; and in its
discretion the Board of Directors may use and apply any such
surplus or accumulative profits in purchasing or acquiring bonds,
debentures, notes, or other obligations or securities of the
Corporation or shares of its own stock of any class so far as may
be permitted by law, to such extent and in such manner and upon
such terms as the Board of Directors shall deem expedient, but
any such bonds, debentures, notes, obligations, securities or
stock so purchased or acquired (together with any stock or
3
<PAGE>
securities acquired in satisfaction of a debt or otherwise), may
be resold. Nothing herein contained, however, shall be held to
limit the general power of the Corporation to apply any other
funds or assets to the purchase or acquisition or retirement of
its stock, bonds, debentures, notes or other obligations or
securities.
Section 3. The Board of Directors, subject to the
applicable provisions of the Colorado Business Corporation Act,
may from time to time determine whether and to what extent, and
at what times and places and under what conditions and
regulations the accounts and books of the Corporation or any of
them shall be open to the inspection of the stockholder; and no
stockholder shall have any right to inspect any account, book or
document of the Corporation, except as conferred by law or as
authorized by the Board of Directors or by resolutions of the
stockholders.
Section 4. The books of the Corporation may be kept within
or without the State of Colorado at such place or places as may
be designated from time to time by the Board of Directors.
Elections of directors need not be by written ballot unless the
Bylaws of the Corporation shall so provide.
Section 5. The Board of Directors may authorize and cause
to be executed mortgages, deeds of trust, pledges and liens upon
the real and personal property of the Corporation, without
limitation as to amount or otherwise.
Section 6. Except as otherwise provided by law and, subject
to any limitations contained in the Bylaws adopted by the holders
of the Corporation's Common Shares, the Board of Directors may,
by the favorable vote of a majority of the directors present at a
meeting at which a quorum is present, or as otherwise specified
in the Bylaws, adopt, amend, alter or repeal Bylaws from time to
time; Bylaws, including Bylaws adopted by the Board of Directors,
may also be altered, amended or repealed by the holders of the
Corporation's Common Shares entitled to vote thereon as specified
in the Bylaws.
Section 7. Special meetings of the stockholders of the
Corporation may be called by the Board of Directors, and shall be
called by the Corporation at the request of any shareholder or
group of shareholders holding not less than 10% of the then
outstanding Common Shares and at the request of such other
person or persons as may be authorized by the Bylaws.
Section 8. The Board of Directors may determine, from time
to time, the amount of compensation which shall be paid to its
members. The Board shall also have power, in its discretion, to
provide for and to pay directors rendering unusual or exceptional
services to the Corporation special compensation appropriate to
the value of such services as determined by the Board of
Directors from time to time.
Section 9. In addition to the powers and authorities
hereinbefore or by statute expressly conferred upon it, the Board
of Directors is hereby empowered to exercise all such powers and
to do all such acts and things as may be exercised or done by the
Corporation; subject, nevertheless, to the provisions of the
4
<PAGE>
statutes of the State of Colorado, of these Articles of
Incorporation and of any Bylaws from time to time made by the
shareholders; provided, however, that no Bylaws so made shall
invalidate any prior act of the Board of Directors which would
have been valid if such Bylaws had not been made.
ARTICLE VIII. Voting by Shareholders.
Section 1. Cumulative Voting. Cumulative voting shall not
be allowed in the election of directors of the Corporation and
every shareholder entitled to vote at such election shall have
the right to vote the number of shares owned by him for as many
persons as there are directors to be elected, and for whose
election he has a right to vote.
Section 2. Denial of Preemptive Rights. No shareholder of
the Corporation shall by reasons of his holding shares of any
class or series have any preemptive or preferential rights to
purchase or subscribe to any shares of any class or series of the
Corporation now or hereafter to be authorized, or any notes,
debentures, bonds or other securities convertible into or
carrying options or warrants to purchase shares of any class or
series now or hereafter to be authorized, whether or not the
issuance of any such shares or notes, debentures, bonds or other
securities would adversely effect the dividend or voting rights
of such shareholder, other than such rights, if any, as the Board
of Directors, in its discretion from time to time, may grant, and
at such price as the Board of Directors, in its discretion, may
fix; and the Board of Directors, if otherwise authorized by the
provisions of these Articles of Incorporation may issue shares of
any class or series of the Corporation or any notes, debentures,
bonds or other securities convertible into or carrying options or
warrants to purchase shares of any class or series, without
offering any such shares of any class or series either in whole
or in part to the existing shareholders of any class or series.
Section 3. Majority Vote. When, with respect to any
action to be taken by the shareholders of the Corporation, the
Colorado Business Corporation Act requires the vote or
concurrence of the holders of greater than a majority of the
outstanding shares, or of any class or series entitled to vote
thereon, any and every such action shall be taken,
notwithstanding the requirements of the Colorado Business
Corporation Act, by the affirmative vote or concurrent of the
holders of a majority of the outstanding shares, or of any class
or series entitled to vote thereon.
ARTICLE IX. Right of Directors to Contract with Corporation.
Section 1. No contract or other transaction between the
Corporation and one or more of its directors or any other
corporation, firm, association or entity in which one or more of
the directors of the Corporation are directors or officers or are
financially interested, shall be either void or voidable solely
because such directors are present at the meeting of the Board of
5
<PAGE>
Directors or a committee thereof which authorizes or approves
such contract or transaction or solely because their votes are
counted for such purpose if:
A. The fact of such relationship or interest is
disclosed or known to the Board of Directors or
committee which authorizes, approves or ratifies the
contract or transaction by a vote or consent sufficient
for that purpose without counting the votes or consents
of the interested directors; or
B. The fact of such relationship or interest is
disclosed or known to the shareholders entitled to vote
and they authorize, approve or ratify such contract or
transaction by vote or written consent; or
C. The contract or transaction is fair and
reasonable to the Corporation.
Section 2. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or a committee thereof which authorizes, approves or
ratifies such contract or transaction.
ARTICLE X. Indemnification of Officers, Directors and
Others. The Board of Directors of the Corporation shall have the
power to:
Section 1. Indemnify any director, officer, employee or
agent of the Corporation to the fullest extent permitted by the
Colorado Business Corporation Act as presently existing or as
hereafter amended.
Section 2. Authorize payment of expenses (including
attorney's fees) incurred in defending a civil or criminal
action, suit or proceeding in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay
such amount unless it is ultimately determined that he is
entitled to be indemnified by the Corporation as authorized in
this Article X.
Section 3. Purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of
the Corporation or who is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status
as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this
Article X.
The indemnification provided by this Article X shall not be
deemed exclusive of any other rights to which those indemnified
may be entitled under these Articles of Incorporation, and
Bylaws, agreement, vote of shareholders or disinterested
directors or otherwise, and any procedure provided for by any of
the foregoing, both as to action in his official capacity and as
6
<PAGE>
to action in another capacity while holding such office, shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE XI. Corporate Opportunity. The officers,
directors and other members of management of this Corporation
shall be subject to the doctrine of "corporate opportunities"
only insofar as it applies to business opportunities in which
this Corporation has expressed an interest as determined from
time to time by this Corporation's Board of Directors as
evidenced by resolutions appearing in the Corporation's minutes.
Once such areas of interest are delineated, all such business
opportunities within such areas of interest which come to the
attention of the officers, directors, and other members of
management of this Corporation shall be disclosed promptly to
this Corporation and made available to it. The Board of
Directors may reject any business opportunity presented to it and
thereafter any officers, directors or other member of management
may avail himself of such opportunity. Until such time as this
Corporation, through its Board of Directors, has designated an
area of interest, the officers, directors and other members of
management of this Corporation shall be free to engage in such
areas of interest on their own and this doctrine shall not limit
the right of any officer, director or other member of management
of this Corporation to continue a business existing prior to the
time that such area of interest is designated by the Corporation.
This provision shall be construed to release any employee of this
Corporation (other than an officer, director or member of
management) from any duties which he may have to this
Corporation.
ARTICLE XII. Limitations on Director Liability. To the
fullest extent permitted by the Colorado Business Corporation Act
as the same exists or may hereafter be amended, a director of
this Corporation shall not be liable to the Corporation or its
shareholders for monetary damages for breach of fiduciary duty as
a director, so long as such director acted in good faith.
ARTICLE XIII. Powers and Limitations. The powers and
limitations of the Corporation shall be those set forth by the
Colorado Business Corporation Act, under which this Corporation
is formed.
ARTICLE XIV. Registered Office and Registered Agent. The
registered office of the Corporation is 7720 E. Belleview Ave.,
Suite 200, Englewood, Colorado 80111; the name of the registered
agent of the Corporation at such address is David J. Babiarz,
Esq.
ARTICLE XV. Incorporator. The name and address of the
Incorporator is as follows:
David J. Babiarz, Esq.
7720 E. Belleview Ave., Suite 200
Englewood, Colorado 80111
ARTICLE XVI. Rights to Amend, Alter, Change or Repeal.
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation
7
<PAGE>
in the manner now or hereinafter prescribed herein or by statute,
and all rights conferred upon shareholders herein are granted
subject to this reservation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
this 30th day of June, 1997.
/s/ David J. Babiarz
___________________________________
David J. Babiarz, Incorporator
STATE OF COLORADO )
)ss.
COUNTY OF ARAPAHOE )
The undersigned, a Notary Public, hereby certifies that on
this 30th day of June, 1997, personally appeared David J.
Babiarz, who, being by me first duly sworn, declared that he is
the person who signed the foregoing document as Incorporator, and
that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
this 30th day of June, 1997.
Witness my hand and official seal.
My commission expires: 12/23/98
/s/ Julie Van Meter
___________________________________
Notary Public
CONSENT OF REGISTERED AGENT
The undersigned, hereby certifies that on this 30th day
of June, 1997, does consent to act as Registered Agent for Full
Tilt Sports, Inc.
/s/ David J. Babiarz
___________________________________
David J. Babiarz, Registered Agent
8
PART III
EXHIBIT 2.2
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
DATED APRIL 15, 1998
<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
FULL TILT SPORTS, INC.
___________
STATEMENT ESTABLISHING
A SERIES OF
PREFERRED STOCK
($.01 Par Value)
SERIES A CONVERTIBLE PREFERRED STOCK
___________
[Pursuant to Section 7-106-102 of the
Colorado Business Corporation Act]
FIRST: The name of the Corporation is FULL TILT SPORTS, INC.
SECOND: FULL TILT SPORTS, INC., a corporation organized
and existing under the laws of the State of Colorado (the
"Corporation"), HEREBY CERTIFIES that the following amendment to
its Articles of Incorporation was duly adopted on April 13, 1998,
by the Board of Directors of the Corporation pursuant to the
authority conferred upon the Board of Directors of the
Corporation by the Articles of Incorporation of the Corporation
and by the Colorado Business Corporation Act:
RESOLVED, that the Board of Directors of the Corporation
(the "Board of Directors") pursuant to authority conferred upon
the Board of Directors by the provisions of the Articles of
Incorporation of the Corporation, as amended (the "Articles of
Incorporation"), which authorize the issuance of up to 5,000,000
shares of preferred stock, $.01 par value (the "Preferred Stock,"
which term shall include any additional preferred stock
authorized from time to time), does hereby create and provide
for the issuance of a series of Preferred Stock and does hereby
fix and determine the designations, preferences, limitations and
relative rights of such series of Preferred Stock as follows:
1. The shares of Series A Convertible Preferred Stock
shall consist of a maximum of 150,000 shares, which shall be
issued at such times and for such consideration as the Board of
Directors shall determine in its discretion, subject to these
Articles of Amendment. Prior to any conversion of the Series A
Convertible Preferred Stock into shares of the Common Stock as
described in paragraph 6 below, the holders (or any subsequent
holders) may only transfer the Series A Convertible Preferred
Stock in a transaction involving the transfer of all unconverted
shares of the Series A Convertible Preferred Stock to the
subsequent holder.
<PAGE>
2. The issue price of the Series A Convertible Preferred
Stock shall be $1.00 per share.
3. The holders of the Series A Convertible Preferred Stock
shall be entitled to receive, out of any assets of the
Corporation lawfully available for dividends pursuant to the laws
of the State of Colorado, preferential fixed dividends at the
rate of 10% per annum ($.10 per year) pro rated to the date of
issuance, for a period of 24 months after issuance, payable
annually on or before December 31 of each such calendar year
before any dividend shall be declared or paid upon or set apart
for the Common Stock. Beginning on the first day of the 25th
month and continuing until the expiration of 60 months from the
date of issuance, unless sooner converted, the dividend shall be
calculated as 3.75% of the " net profits" of the Corporation and
payable annually on or before 90 days from the closing of the
Corporation's fiscal year. Payment of dividends for any portion
of a fiscal year shall be prorated. For purposes of this
paragraph 3, net profits shall be calculated after taxes and
determined with reference to the financial statements of the
Company, prepared in accordance with generally accepted
accounting principles and filed with the United States Securities
and Exchange Commission. If for any reason such financial
statements are not filed with the Commission, such determination
shall none the less be made with reference to the financial
statements prepared in accordance with generally accepted
accounting principles. Such dividends upon the Series A
Convertible Preferred Stock shall be cumulative from the date of
issue so that if dividends for any past dividend period shall not
have been paid thereon the deficiency shall be fully paid (but
without interest), before any dividend shall be paid upon or set
apart for the Common Stock or any other series of Preferred
Stock. If shares of the Series A Convertible Preferred Stock are
converted during any calendar year pursuant to paragraph 6 below,
then the preferential dividend provided for in this paragraph 3
with respect to such converted shares shall be pro-rated for the
applicable period of such year prior to conversion and shall be
payable 90 days after completion of the fiscal year.
4. No new series of Preferred Stock shall be granted
senior dividend preferences over the preferential dividend rights
of Series A Convertible Preferred Stock.
5. In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, whether voluntary or
involuntary, the holder of the Series A Convertible Preferred
Stock shall be entitled, before any assets of the Corporation
shall be distributed among or paid over to the holders of the
Common Stock or any other Preferred Stock, to be paid $1.00 per
share of Series A Convertible Preferred Stock together with a sum
of money equivalent to preferential dividends to which shares of
Series A Convertible Preferred Stock may be entitled, if any,
from the date which preferential dividends on such Series A
Convertible Preferred Stock became cumulative to the date of
payment thereof, less the amount of preferential dividends
theretofore paid thereon. In the event of any authorization of a
new series of Preferred Stock having liquidation preferences, the
shares having liquidation preferences shall be subordinate to and
not be entitled to liquidation preferences senior to or equal to
the Series A Convertible Preferred Stock. After the making of
full payment of liquidation preferences to the holders of the
Series A Convertible Preferred Stock, the remaining assets of the
Corporation shall be distributed ratably to any other Preferred
Stock having liquidation preferences in accordance with their
priorities and then ratably among the holders of the Common Stock
and any other series of Preferred Stock without liquidation
preferences.
6. (a) The holder of the shares of the Series A
Convertible Preferred Stock shall have the right, at its option,
at any time and from the time to time on any business day, up to
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<PAGE>
and including the close of business on April 13, 2003 (or if such
day shall not be a business day the immediately preceding
business day), to convert, subject to the terms of this section
(including adjustment), all of the shares of the Series A
Convertible Preferred Stock into shares of Common Stock on a one
for one basis. On April 14, 2003, any shares of Series A
Convertible Preferred Stock which have not been converted shall
be automatically converted with no further action by the holder.
The holder of the shares of Series A Convertible Preferred Stock
shall be entitled to exercise the foregoing conversion rights in
minimum increments of 10,000 shares of Series A Convertible
Preferred Stock; provided, that the final increment to be
converted may be less than 10,000 shares of Series A Convertible
Preferred Stock. Only whole shares of Series A Convertible
Preferred Stock may be converted and only whole shares of Common
Stock may be issued as a result of conversion.
(b) In order to convert shares of the Series A
Convertible Preferred Stock into Common Stock, the holder thereof
shall deliver the stock certificates representing the shares to
be converted to the Corporation at its then principal office,
accompanied by written notice ("Conversion Notice") that it
elects to convert the shares represented thereby into shares of
Common Stock in accordance with the provisions of this paragraph
6. Said Conversion Notice shall specify the number of shares of
Series A Preferred Stock to be converted.
(c) As promptly as practicable after the surrender as
hereinabove provided of stock certificates representing the
shares to be converted into Common Stock, accompanied by a duly
completed and executed Conversion Notice, the Corporation shall
deliver or cause to be delivered to the holder, certificates
representing the whole number of fully paid and non-assessable
shares of Common Stock of the Corporation into which said shares
are being converted, and, if less than all of the shares
represented by the surrendered stock certificates are converted,
new stock certificates for the whole shares not so converted.
Such conversion shall be deemed to have been made immediately
following the close of business on the date that such shares,
accompanied by duly completed and executed Conversion Notice,
shall have been duly surrendered for conversion as herein
provided, so that the holder entitled to receive the shares of
Common Stock upon conversion of the Series A Convertible
Preferred Stock shall at such time be treated for all purposes as
having become the record holder of such shares of Common Stock
immediately following the close of business on such date and the
rights of the holder of such converted shares, as such holder,
shall cease at such time. The issuance of certificates for
shares of Common Stock upon the conversion shall be made without
charge to the holder of the converted shares for any stock
transfer or issue tax in respect of the surrender of shares for
conversion, or the issuance of such certificates for the shares
receivable on conversion. Converted shares shall be canceled and
shall not be reissued. The Corporation shall at all times
reserve and keep available out of its authorized but unissued
shares of Common Stock a sufficient number of shares for the
purpose of effecting the conversion or exchange for the Series A
Convertible Preferred Stock then deliverable upon the conversion
or exchange of the entire Series A Convertible Preferred Stock at
the time outstanding.
(d) The Conversion Rate shall be subject to
adjustment from time to time as follows:
(i) If at any time or times after the date hereof the
Corporation shall effect a reorganization, shall merge with or
consolidate into another Corporation, or shall sell, transfer or
otherwise dispose of all or substantially all of its property, assets
or business and, pursuant to the terms of such reorganization, merger,
consolidation or disposition of assets, shares of stock or other securities,
3
<PAGE>
property or assets of the Corporation (or the successor, transferee or
affiliate of the Corporation) or cash are to be received by or distributed
to the holders of Common Stock, then the holders of the Series A Convertible
Preferred Stock shall have the right thereafter to receive, upon conversion
thereof, the number of shares of stock or other securities, property or
assets of the Corporation (or the successor, transferee or affiliate of
the Corporation), or cash receivable upon or as a result of such
reorganization, merger, consolidation or disposition of assets by holder of
the number of shares of Common Stock into which such Series A Convertible
Preferred stock was convertible immediately prior to such event and the
Corporation shall make lawful provision therefor as part of such transaction.
The provisions of this subdivision (i) shall similarly apply to successive
reorganizations, mergers, consolidations or dispositions of assets.
(ii) Whenever the Conversion Rate shall be
adjusted pursuant to this paragraph 5(d), the Corporation shall
forthwith obtain, and cause to be delivered to the holders of the
Series A Convertible Preferred Stock, a certificate signed by the
President, Vice President or Treasurer of the Corporation,
setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated
and specifying the new Conversion Rate. In the case referred to
in subdivision (i), such a certificate shall be issued describing
the amount and kind of stock, securities, property of assets or
cash which shall be receivable upon conversion of the Series A
Convertible Preferred Stock after giving effect to the provisions
of such subdivision (i).
(e) In case at any time the Corporation shall offer
for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or other rights, or there
shall be any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the
Corporation (other than a change in par value or from par value
to no par value or from no par value to par value) or any
transfer of all or substantially all of the assets of the
Corporation to or consolidation or merger of the Corporation with
or into any other person, or any voluntary of involuntary
dissolution, liquidation or winding-up of the Corporation; then,
and in each event, the Corporation will mail or cause to be
mailed to the holder of Series A Convertible Preferred Stock a
notice specifying (x) the date on which any such record is to be
taken for the purpose of distribution of such subscription right,
and stating the amount and character of such subscription right,
and (y) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place,
and the time, if any, as of which the holders of record of Common
Stock shall be entitled to exchange their shares of deliverable
upon such reorganization, reclassification, liquidation or
winding-up. Such notice shall be mailed at least twenty (20)
days prior to the date therein specified if lawful and
practicable.
7. The Series A Convertible Preferred Stock and the shares
of Common Stock issuable on conversion thereof may not be
transferred without prior compliance with the Securities Act of
1933 and restrictive legends to such effect may be placed upon
and stop transfer orders issued with respect to the stock
certificates representing such shares.
8. The holder of the Series A Convertible Preferred Stock
shall be entitled to one vote for each share held of record so
long as the Preferred Stock is outstanding. Holders of the
Series A Convertible Preferred Stock shall vote as a single class
with holders of the Common Stock, except as otherwise provided by
applicable law.
4
<PAGE>
9. The Series A Convertible Preferred Stock may be
redeemed on or after April 13, 1999 in cash, at any time or from
time to time, in whole or in part at the option of the
Corporation at the redemption price of $1.00 per share plus
accrued but unpaid dividends. Notice of the proposed redemption
shall be sent by or on behalf of the Corporation, by certified
mail, postage prepaid to the holders of record of the Series A
Convertible Preferred Stock at their respective addresses as the
same shall appear on the records of the Corporation, not less
than thirty days prior to the date fixed for redemption notifying
the holder of the election of the Corporation to redeem the share
and the date of redemption, stating the date on which the shares
shall cease to be convertible and stating the place or places at
which the shares called for redemption shall be redeemed in the
name and address of the redemption agent. When notice of
redemption shall have been given as hereinabove provided, and the
Corporation shall not default in the payment of the redemption
price, then the holders of the shares called for redemption shall
be entitled to all the preferences and rights afforded by this
resolution until and including the date immediately prior to the
redemption date, except that the conversion rights shall
terminate as provided in the notice, which shall not be less than
25 days from the date of notice. If the Corporation shall fail
to make payment or delivery on the redemption date, then the
holder shall be entitled to all such preferences and rights until
the date prior to the date when the Corporation actually makes
payment. From and after that time, the shares called for
redemption shall no longer be deemed outstanding.
IN WITNESS WHEREOF, Full Tilt Sports, Inc. has caused its
corporate seal to be hereunto affixed and this instrument to be
signed by its President and attested by its Secretary this
day of April, 1998.
FULL TILT SPORTS, INC.
[Corporate Seal] By: /s/ Roger K. Burnett
------------------------
Roger K. Burnett, President
Attest:
/s/ Stephen K. Anderson
_______________________
Secretary
5
PART III
EXHIBIT 2.3
BYLAWS
<PAGE>
BYLAWS
OF
FULL TILT SPORTS, INC.
ARTICLE I
Office
------
The principal office of the Corporation in the State of
Colorado shall be located at 5525 Erindale Drive , Suite 201,
Colorado Springs, Colorado 80918, and thereafter at such location
as the Board of Directors may determine.
The Corporation may have such other offices, either within
or without the State of Colorado, as the Board of Directors may
determine or as the affairs of the Corporation may require from
time to time.
The Corporation shall have and continuously maintain in the
State of Colorado a registered office, and a registered agent
whose office is identical with such registered office as required
by the Colorado Business Corporation Act.
ARTICLE II
Shareholders' Meetings
----------------------
Section 1 Annual Meetings.
A. Time and Place. The Annual Meeting of the
Shareholders of the Corporation, commencing with the year of
incorporation, shall be as determined by the Board of
Directors on a date not less frequent than once every 365
days. If said day is a legal holiday, the meeting shall be
held on the next succeeding day not a legal holiday.
B. Purpose of Annual Meeting. The business to be
transacted at such Annual Meeting shall be the election of
Directors and such other business as shall be properly
brought before the meeting.
C. Alternate Election Date. If the election of
Directors shall not be held on the day designated for the
Annual Meeting, or at the designated date upon adjournment
of such meeting, the Board of Directors shall call a Special
Meeting of the Shareholders as soon as conveniently possible
thereafter. At such meeting, the election of Directors
shall take place, and such election and any other business
transacted there at shall have the same force and effect as
at an Annual Meeting duly called and held.
1
<PAGE>
D. Notice. Written notice at the address last shown
on the books of the Corporation stating the place, day and
hour of the meeting, and in the case of a Special Meeting
the purpose for which the meeting is called, shall be
delivered not less than 10 days nor more than 50 days before
the date of the meeting, either personally or by mail at the
direction of the President, Secretary or other officer or
person calling the meeting; except that if the authorized
shares of the Corporation are to be increased, at least 30
days notice shall be given.
Section 2. Special Meetings. Special Meetings of the
Shareholders may be called by the President, Board of Directors
or by the holders of at least 10% of the stock entitled to vote
at such meeting.
Section 3. Waiver of Notice. A Shareholder may waive
the notice of meeting by attendance, either in person or by
proxy, at the meeting, or by so stating in writing either before
or after such meeting. Attendance at a meeting for the express
purpose of objecting that the meeting was not lawfully called or
convened shall not, however, constitute a waiver of notice.
Except where otherwise required by law, notice need not be given
of any adjourned meeting of the Shareholders.
Section 4. Quorum. The holders of record of at least a
majority of the shares of the stock of the Corporation, issued
and outstanding and entitled to vote, present in person or by
proxy, shall, except as otherwise provided by law or by these
Bylaws, constitute a quorum at all meetings of the Stockholders;
if there be no such quorum, the holders of a majority of such
shares so present or represented may adjourn the meeting from
time to time until a quorum shall have been obtained and, except
as otherwise provided by law, no notice of any such adjourned
meeting need be given if the time and place to which the meeting
is adjourned are announced at the meeting so adjourned.
Section 5. Closing of Transfer Books; Record Date. In
order to determine the Shareholders of record of the
Corporation's stock who are entitled to notice of meetings, to
vote at a meeting or adjournment thereof, and to receive payment
of any dividend, or to make a determination of the Shareholders
of record for any other proper purpose, the Board of Directors of
the Corporation may order that the Stock Transfer Books be closed
for a period not to exceed 50 days. If the purpose of such
closing is to determine who is entitled to notice of a meeting
and to vote at such meeting, the Stock Transfer Books shall be
closed for at least ten days preceding such meeting.
A. Record Date. In lieu of closing the Stock
Transfer Books, the Board of Directors may fix a date as the
record date for such determination of Shareholders, such
date in any case to be not more than 50 days prior to the
date of action which requires such determination, nor in the
case of a Shareholders' meeting, not less than ten days in
advance of such meeting.
2
<PAGE>
B. Alternate Record Date. If the Stock Transfer
Books are not closed and no record date is fixed for such
determination of the Shareholders of record, the date on
which notice of the meeting is mailed or on which the
resolution of the Board of Directors declaring a dividend is
adopted, as the case may be, shall be the record date for
such determination of Stockholders.
C. Adjournment. When a determination of Stockholders
entitled to vote at any meeting has been made, as provided
in this Section, such determination shall apply to any
adjournment of such meeting.
Section 6. Presiding Officer. Meetings of the Stockholders
shall be presided over by the President.
Section 7. Proxies. At all meetings of Stockholders, a
Stockholder may vote by proxy executed in writing by the
Stockholder or the Stockholder's duly authorized attorney-in-
fact. Such proxies shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall
be valid after 11 months from the date of its execution, unless
otherwise provided in the proxy.
Section 8. Voting of Shares by Stockholders.
A. Neither treasury shares, nor shares of its own
stock held by the Corporation in a fiduciary capacity, nor
shares held by another corporation if a majority of the
shares entitled to vote for the election of directors of
such other corporation is held by this Corporation, shall be
voted at any meeting or counted in determining the total
number of outstanding shares at any given time.
B. At each meeting of the Stockholders, except as
otherwise provided by law or the Certificate of
Incorporation, every holder of record of stock entitled to
vote shall be every holder of record of stock entitled to
vote shall be stock standing in his name on the books of the
Corporation. Elections of directors shall be determined by
a plurality of the votes cast thereat, and except as
otherwise provided by law, the Certificate of Incorporation,
or these Bylaws, all other actions shall be determined by a
majority of the votes cast at such meeting. Each proxy to
vote shall be in writing and signed by the Stockholder or by
his duly authorized attorney and shall not be voted or acted
upon after eleven (11) months from the date of its
execution, unless such proxy expressly provides for a longer
period.
C. At all elections of directors, the voting shall be
by ballot or in such other manner as may be determined by
the Stockholders present in person or by proxy entitled to
vote at such election. With respect to any other matter
presented to the Stockholders for their consideration at a
meeting, any Stockholder entitled to vote may, on any
question, demand a vote by ballot. The cumulative system of
voting for the election of directors or for any other
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purpose shall not be allowed.
D. A complete list of the Stockholders entitled to vote
at each such meeting, arranged in alphabetical order, with
the address of each, and the number of shares registered in
the name of each Stockholder, shall be prepared by the
Secretary and shall be open to the examination of any
Stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may
be inspected by any Stockholder who is present.
E. The Board of Directors in advance of any meeting of
Stockholders may appoint one or more inspectors of election
to act at that meeting or any adjournment thereof. If
inspectors of election are not so appointed, the Chairman of
the meeting may, and on the request of any Stockholder
entitled to vote shall, appoint one or more inspectors of
election. Each inspector of election, before entering upon
the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector of election at
such meeting with strict impartiality and according to the
best of his ability. If appointed, inspectors of election
shall take charge of the polls and, when the vote is
completed, shall make a certificate of the result of the
vote taken and of such other facts as may be required by
law.
Section 9. Informal Action by Stockholders. Any action
required to be taken at a meeting of the Stockholders or any
other action which may be taken at a meeting of the Stockholders
may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the
Stockholders entitled to vote with respect to the subject matter
thereof. Such consent shall have the same force and effect as a
unanimous vote of the Stockholders and may be stated as such in
any documents filed with the Secretary of State of Colorado under
the Colorado Business Corporation Act.
A. Validity of Stockholder Meetings. Failure to
comply with the requirements of this Section shall not
affect the validity of any action taken at such meeting of
the Stockholders.
Section 10. Presumption of Assent. A Stockholder of the
Corporation who is present at a meeting of the Stockholders at
which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless such Stockholder's
dissent shall be entered in the Minutes of the meeting or unless
such Stockholder shall have filed written dissent to such action
with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by certified
mail to the Secretary of the Corporation immediately following
the adjournment of the meeting. Such right to dissent shall not
4
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apply to a Stockholder who voted in favor of such action.
ARTICLE III
Directors
---------
Section 1. Number. The property, affairs and business of
the Corporation shall be managed by a Board of Directors of not
less than three (3) persons as shall be fixed by the Board of
Directors. Except as hereinafter provided, Directors shall be
elected at the Annual Meeting of the Stockholders and each
Director shall serve until the next annual meeting of
shareholders or his resignation or removal and until his
successor shall be elected and qualify.
Section 2. Increase in Numbers. The number of Directors
may be increased or decreased from time to time by a majority
vote of the whole Board of Directors, provided however, that no
vote to decrease the number of Directors shall have the effect of
shortening the term of any incumbent Director.
Section 3. Qualification. Directors need not be Stockholders
of the Corporation.
Section 4. Quorum. A majority of the Directors in
office shall be necessary to constitute a quorum for the
transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority
of those present may adjourn the meeting without further notice,
from time to time, until a quorum shall have been obtained.
Section 5. Vacancies. Any Director may resign at any
time by giving written notice to the President or to the
Secretary of the Corporation. Such resignation shall take effect
at the time specified therein except such resignations shall not
be submitted effective retroactively. Unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective. Any Director may be removed at
any time in the manner provided in the Colorado Business
Corporation Act. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of the Stockholders, or by
the remaining Directors, though less than a quorum, or by a sole
remaining Director. A Director elected to fill a vacancy shall
be elected for the unexpired term of such Director's predecessor
in office. Any vacancy may be filled by the affirmative vote of
Directors then in office or by an election at an Annual Meeting
or at a Special Meeting of Stockholders called for that purpose,
and a Director so chosen shall hold office until the next Annual
meeting of Stockholders and thereafter until such Director's
successor shall have been elected and qualified.
Section 6. Meetings. Regular meetings of the Board of
Directors shall be held at such times as are fixed from time to
time by resolution of the Board. Special Meetings may be held at
any time upon call of the President, or a majority of Directors
serving as members of the Board of Directors. A meeting of the
Board of Directors shall be held without notice immediately
following the Annual Meeting of the Stockholders. Notice need
not be given of regular meetings of the Board of Directors held
at any time without notice if all the Directors are present, or
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if before the meeting those not present waive such notice in
writing. Notice of a meeting of the Board of Directors need not
state the purpose of nor the business to be transacted at such
meeting.
Section 7. Presumption of Assent. A Director of the
Corporation who is present at a meeting of the Board of Directors
at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless such
Director's dissent shall be entered in the Minutes of the meeting
or unless such Director shall have filed written dissent to such
action with the person acting as the Secretary of the meeting
before the adjournment thereof or shall forward such dissent by
certified mail to the Secretary of the Corporation immediately
following the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favor of such action.
Section 8. Removal. At any meeting of Stockholders, any
Director or Directors may be removed from office, without
assignment of any reason therefor, by a requisite majority of the
Stockholders. When any Director or Directors are removed, new
Directors may be elected at the same meeting of Stockholders for
the unexpired term of the Director or Directors to be removed.
If the Stockholders fail to elect persons to fill the unexpired
term or terms of the Director or Directors removed, such
unexpired terms shall be considered vacancies on the Board to be
filled by the remaining Directors.
Section 9. Informal Action by Directors. Any action
required to be taken at a meeting of the Board of Directors or
any other action which may be taken at a meeting of the Board of
Directors may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the
Directors entitled to vote with respect to the subject matter
thereof. Such consent shall have the same force and effect as a
unanimous vote of the Directors and may be stated as such in any
documents filed with the Secretary of State of Colorado under the
Colorado Business Corporation Act.
Section 10. Compensation. Directors and members of any
committee of the Board of Directors shall be entitled to such
reasonable compensation for their services as Directors and
members of any such committee as shall be fixed from time to time
by resolution of the Board of Directors, and shall also be
entitled to reimbursement for any reasonable expenses incurred in
attending such meetings. The compensation of Directors may be on
such basis as is determined in the resolution of the Board of
Directors. Any Directors receiving compensation under these
provisions shall not be barred from serving the Corporation in
any other capacity and receiving reasonable compensation for such
other services.
Section 11. Committees. The Board of Directors, by a
resolution or resolutions adopted by a majority of the members of
the whole Board, may appoint an executive committee and such
other committees as it may deem appropriate. Each such committee
shall consist of at least two members of the Board of Directors.
Each committee shall have and may exercise such powers as shall
be conferred or authorized by the resolution appointing it and as
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otherwise provided by Colorado law. A majority of any such
committee may determine its action and may fix the time and place
of its meetings, unless provided otherwise by the Board of
Directors. The Board of Directors shall have the power at any
time to fill vacancies in, to change the size of membership of
and to discharge any such committee.
A. Committee to Keep Written Records. Each such
committee shall keep a written record of its acts and
proceedings and shall submit such record to the Board of
Directors at each regular meeting thereof and at such other
times as requested by the Board of Directors.
B. Failure to Keep Written Records. Failure to
submit such records, or failure of the Board to approve any
action indicated therein will not, however, invalidate such
action to the extent it has been carried out by the
Corporation prior to the time the record of such action was,
or should have been, submitted to the Board of Directors as
herein provided.
Section 12. Director Voting. At all meetings of the
Board of Directors, each Director present shall have one vote,
irrespective of the number of shares of stock, if any, which such
Director may hold.
Section 13. Majority. The action of a majority of the
Directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors with respect to
regularly conducted business affairs. Any action authorized, in
writing, by all of the Directors entitled to vote thereon and
filed with the minutes of the Corporation shall be the act of the
Board of Directors with the same force and effect as if the same
had been passed by unanimous vote at a duly called meeting of the
Board.
Section 14. Board and Committee Meeting by Telephone.
Any one or more (including, without limitation, all) members of
the Board of Directors, or any committee thereof, may participate
in a meeting of the Board or such committee by means of a
conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at
the same time. Participation by such means shall constitute
presence in person at a meeting.
ARTICLE IV
Officers
Section 1. Election and Term of Office. The Officers of
the Corporation shall be elected by the Board of Directors
annually at the first meeting of the Board held after each Annual
Meeting of the Stockholders. If the election of the Officers
shall not be held at such meeting, such election shall be held as
soon thereafter as conveniently may occur. Each Officer shall
hold office until the first of the following to occur: until
such Officer's successor shall have been duly elected and shall
have qualified; or until such Officer's death; or until such
Officer shall resign; or until such Officer shall have been
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<PAGE>
removed in the manner herein provided. The Officers of the
Corporation shall be a President, Secretary, Treasurer and one
(1) or more Vice-Presidents, Assistant Secretaries or Assistant
Treasurers, at the discretion of the Board of Directors. In
addition, there may be Chairman of the Board of Directors and
such subordinate Officers as the Board of Directors may deem
necessary.
Section 2. Removal. Any Officer or agent or employee of
the Corporation may be removed by the Board of Directors whenever
in its judgment the best interests of the Corporation will be
served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed. Election
or appointment of any Officer or agent shall not of itself create
contract rights.
Section 3. Vacancies. Any vacancy in an office from any
cause may be filled for the unexpired portion of the term by the
Board of Directors.
Section 4. Chairman of the Board - Chief Executive
Officer. The Chairman of the Board shall be the chief executive
officer of the Corporation and shall preside at all meetings of
the Board of Directors and of the Stockholders at which he is
present. He shall have general charge of the business and
affairs of the Corporation, may execute in the name of the
Corporation authorized corporate obligations or other
instruments, shall perform such other duties as may be prescribed
by the Board of Directors from time to time, and, in the absence
or disability of the President, shall exercise all of the powers
and duties of the President. In the absence or disability of the
Chairman of the Board, the President shall exercise all the
powers and duties of the Chairman of the Board. In addition, the
President shall perform such duties as may be prescribed by the
Board of Directors from time to time or as may from time to time
be prescribed by the Chairman of the Board.
Section 5. President. The President shall be the
chief operating officer of the Corporation and, in the absence or
disability of the Chairman of the Board, he shall exercise all of
the powers and duties of the Chairman of the Board. He shall
have general and active supervision of the operations of the
Corporation and shall, from time to time, make such reports of
the Chairman of the Board may require. He shall have the general
powers and duties of supervision usually vested in the office of
the president of a corporation and shall have such other powers
and duties as may, from time to time, be assigned to him by the
Board of Directors or the Chairman of the Board.
The President shall execute all deeds, conveyances,
deeds of trust, bonds and other contracts requiring a seal, under
the seal of the Corporation, except where required or permitted
by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the
Board of Directors to some Officer or agent of the Corporation.
Section 6. Duties of Secretary. The Secretary shall:
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A. Keep the minutes of the meeting of the
Stockholders and of the Board of Directors in books provided
for that purpose.
B. Disseminate all notices in accordance with the
provisions of these Bylaws or as required by law.
C. Maintain custody of the seal of the Corporation
and affix the seal to all stock certificates prior to their
issuance and to all other documents, the execution of which
on behalf of the Corporation under its seal is duly
authorized and in accordance with the provisions of these
Bylaws.
D. Keep or cause to be kept records relating to the
transfer of stock in such manner as to show at any time the
amount of stock of the Corporation issued and outstanding,
the manner in which and the time when such stock was paid
for, the names and addresses of the holders of record.
E. Execute certificates of stock of the Corporation
with the President.
F. Maintain all books, reports, statements,
certificates and all other documents of the Corporation
required by law in a proper fashion.
G. Perform all duties incident to the office of
Secretary and such other duties as, from time to time, may
be assigned by the Board of Directors or by the President.
Section 7. Duties of Treasurer - Chief Financial
Officer. The Treasurer - Chief Financial Officer shall have the
care and custody of the corporate funds and securities, sign
checks, drafts, notes and orders for the payment of money, pay
out and disburse the funds of the Corporation as may be ordered
by the Board, taking proper vouchers for such payments and
disbursements, deposit all monies and securities belonging to the
Corporation and, in general, perform such other duties as are
customarily performed by the Treasurer - Chief Financial Officer.
The Treasurer shall:
A. Have charge and custody of, and be responsible
for, all funds and securities of the Corporation.
B. Render a statement of the condition of the
finances of the Corporation from time to time and at the
specific request of the Board of Directors.
C. Receive and give receipts for monies due and
payable to the Corporation from any source whatsoever.
D. Perform all duties incident to the office of
Treasurer, and such other duties as from time to time may be
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assigned by the Board of Directors or by the President. The
Treasurer may be required to give bond for the faithful
performance of Treasurer's duties in such sum and with such
surety as may be determined by the Board of Directors.
Section 8. Duties of Vice-President. The Vice-
President(s), if appointed in the discretion of the Board of
Directors, shall perform such duties as are incident to their
offices, or are properly required of them by the Board of
Directors or are assigned to them by the Articles of
Incorporation or these Bylaws.
Section 9. Duties of Assistant Secretaries, Assistant
Treasurers and Other Subordinate Officers. Assistant
Secretaries, Assistant Treasurers, and other subordinate Officers
appointed by the Board of Directors shall exercise such powers
and perform such duties as may be delegated to them by the
resolutions appointing them, or by subsequent resolutions adopted
from time to time.
Section 10. Duties of Officers May Be Delegated. In
case of the absence or disability of any officer of the
Corporation, or for any other reason that the Board may deem
sufficient, the Board may delegate, for the time being, the
powers or duties, or any of them, of such officer to any other
officer, or to any director.
Section 11. Salaries. The salaries of all Officers of
the Corporation shall be fixed by the Board of Directors. No
Officer shall be ineligible to receive such salary by reason of
the fact that he is also a Director of the Corporation and
receiving compensation therefor.
Section 12. Checks and Endorsements. All checks and
drafts upon the funds to the credit of the Corporation in any of
its depositories shall be signed by such of its Officers or
agents as shall from time to time be determined by resolution of
the Board of Directors which may provide for the use of
signatures under specific conditions, and all notes, bills,
receivables, trade acceptances, drafts and other evidences of
indebtedness payable to the Corporation shall, for the purpose of
deposit, discount, or collection be endorsed by such Officers or
agents of the Corporation or in such manner as shall from time to
time be determined by resolution of the Board of Directors.
ARTICLE V
Stock
-----
Section 1. Certificates. The shares of stock shall be
represented by consecutively numbered certificates signed in the
name of the Corporation by its President and the Secretary and
shall be sealed with the seal of the Corporation, or with a
facsimile thereof. The signatures of the Corporation's Officers
on such certificate may also be a facsimile engraved or printed
if the certificate is countersigned by the transfer agent, or
registered by a registrar. In the event any Officer who has
signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such before the certificate
is issued, it may be issued by the Corporation with the same
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effect as if such Officer had not ceased to be an officer at the
date of its issue. Certificates of stock shall be in such form
consistent with law as shall be prescribed by the Board of
Directors. No certificate shall be issued until the shares
represented thereby are fully paid.
Section 2. Consideration for Shares. Shares shall be
issued for such consideration, expressed in dollars as shall be
fixed from time to time by the Board of Directors. Treasury
shares shall be disposed of for such consideration expressed in
dollars as may be fixed from time to time by the Board. Such
consideration may consist in whole or in part of money, other
property, tangible or intangible, a promissory note or in labor
or services actually performed or future services performed for
the Corporation.
Section 3. Lost, Destroyed or Stolen Certificates. No
certificates for shares of stock in the Corporation shall be
issued in place of any certificate alleged to have been lost,
destroyed or stolen except on production of evidence satisfactory
to the Board of Directors of such loss, destruction or theft; and
if the Board of Directors so requires, upon the furnishing of an
indemnity bond in such amount and with such terms and such surety
as the Board of Directors may, in its discretion, require.
Section 4. Transfer of Shares.
A. Upon surrender to the Corporation of a certificate
of stock duly endorsed or accompanied by proper evidence of
succession, assignment, or authority to transfer, it shall
be the duty of the Corporation to issue a new certificate to
the person entitled thereto, and cancel the old certificate.
Every such transfer of stock shall be entered on the stock
book of the Corporation which shall be kept either at the
offices of the Corporation's legal counsel, at the
Corporation's principal office or by its registered duly
appointed agent.
B. The Corporation shall be entitled to treat the
holder of record of any share of stock as the holder in fact
thereof, and, accordingly, shall not be bound to recognize
any equitable or other claim to interest in such share on
the part of any other person whether or not it shall have
express or other notice thereof, except as may be required
by the laws of the State of Colorado.
Section 5. Record Dates. The Board of Directors may fix
in advance a date, not less than ten (10) or more than fifty (50)
days preceding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the
distribution or allotment of rights, or the date when any change,
conversion or exchange of capital stock shall go into effect, as
a record date for the determination of Stockholders entitled to
notice of, and to vote at, any such meeting, or entitled to
receive payment of any such dividend, or to receive any
distribution or allotment of such rights, or to exercise the
rights in respect of any such change, conversion or exchange or
capital stock, and in such case only such Stockholders as shall
be Stockholders of record on the date so fixed shall be entitled
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to such notice of, and to vote at, such meeting, or to receive
payment of such dividend, or to receive such distribution or
allotment of rights, or to exercise any stock on the books of the
Corporation after any such record date fixed as aforesaid.
Section 6. Voting on Stock. All stock owned by the
Corporation, other than stock of the Corporation, shall be voted,
in person or by proxy, by the Chairman of the Board, the Vice
Chairman of the Board, the President or any Vice President of the
Corporation on behalf of the Corporation upon resolution and
approval by the board.
ARTICLE VI
Contracts, Loans, Checks and Deposits
-------------------------------------
Section 1. Contracts. The Board of Directors may
authorize any officer or agent to enter into any contract or
execute and deliver any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined
to specific instances.
Section 2. Loans. No loans shall be contracted on
behalf of the Corporation and no evidence of indebtedness shall
be issued in its name unless authorized by a resolution of the
Board of Directors. Such authority may be general or confined to
specific instances.
Section 3. Checks, Drafts, etc. All checks,
drafts, or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the Corporation
shall be signed by such officer or agent of the Corporation and
in such manner as shall from time to time be determined by
resolution of the Board of Directors.
Section 4. Deposits. The money of the Corporation shall
be deposited in the name of the Corporation in such banks, trust
companies, or other depositories, as the Board of Directors may
designate and shall be subject to the order of the Corporation
signed by such officer or agent of the Corporation, and in such
manner as shall from time to time be determined by resolution of
the Board of Directors.
ARTICLE VII
Corporate Seal
--------------
The corporate seal of the Corporation shall consist of a
circular imprint bearing around the outside rim the name of the
Corporation and the word "Colorado" and in the center shall be
inscribed the word "Seal".
ARTICLE VIII
Amendment of Bylaws
-------------------
Section 1. By Shareholders. All Bylaws of the
Corporation shall be subject to alteration or repeal and new
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Bylaws may be made by the requisite vote of Stockholders, a
quorum being present in person or by proxy, provided that the
notice or waiver of notice of such meeting shall have summarized
or set forth in full therein the proposed amendment.
Section 2. By Directors. The Board of Directors shall
have power to make, adopt, later, amend or repeal, from time to
time, these Bylaws of the Corporation.
ARTICLE IX
Fiscal Year
-----------
The fiscal year end of the Corporation shall be as
determined by the Board of Directors.
ARTICLE X
Approval
---------
The undersigned hereby certifies that the foregoing Bylaws
constitute a true and complete copy of the Bylaws of Full Tilt
Sports, Inc. and the same have been approved, ratified and
accepted by the Board of Directors as the Bylaws of the
Corporation.
Dated: 7/07/97 /s/ Stephen K. Anderson
_______ ____________________________________
Stephen K. Anderson, Secretary
13
PART III
EXHIBIT 3.1
FORM OF WARRANT CERTIFICATE
DATED
APRIL 14, 1998
<PAGE>
THE SECURITES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE SECURITIES ACT)
OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE, IN RELIANCE
UPON EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION.
WARRANT CERTIFICATE
For the Purchase of Common Shares
$.001 Par Value per Share
Of
FULL TILT SPORTS, INC.
(A Colorado Corporation)
Warrant No. Warrants
___________ ________
___________ ________
EXERCISABLE APRIL 14, 1998 AND VOID AFTER APRIL 13, 2000
This is to certify that for value received,
___________________, or registered assigns ("Warrantholder") is
the registered owner of the above indicated number of Warrants
expiring on April 13, 2000 ("Expiration Date"). One Warrant
entitles the Warrantholder to purchase one share of Common Stock,
.001 par value ("Share"), from Full Tilt Sports, Inc., a Colorado
corporation (the "Company"), at a purchase price of $2.00 per
share of Common Stock ("Exercise Price") commencing on April 14,
1998 and terminating on the Expiration Date, upon surrender of
this Warrant Certificate with the exercise form hereon duly
completed and executed with the payment of the Exercise Price at
the office of the Company, but only subject to the conditions set
forth herein. The Exercise Price, the number of shares purchasable
upon exercise of each Warrant, and the Expiration Date are subject
to adjustments described herein. The Warrantholder may exercise all
or any number of the Warrants represented hereby. If the rights
represented hereby shall not be exercised at or before the Expiration
Date, this Warrant shall become and be void without further force or
effect, and all rights represented hereby shall cease and expire.
1. TERM OF WARRANT. The Warrants evidenced by this Warrant
Certificate may be exercised in whole or in part at any time for
a period of 24 months commencing on April 14, 1998 and expiring
at 5:00 o'clock p.m. Mountain time on April 13, 2000; provided,
however, that the Company may extend the exercise period of this
Warrant by giving notice of such extension.
2. NOTICE OF EXTENDED EXPIRATION DATE. The Company may
extend the Expiration Date for the exercise of this warrant at
any time by giving thirty (30) days written notice thereof to the
Warrantholder. If this Warrant is not exercised on or before the
extended Expiration Date, it shall become wholly void.
3. ADJUSTMENTS OF EXERCISE PRICE AND SHARE. In the event
the Common Stock issuable upon exercise of this Warrant shall be
changed into the same or different number of shares of any class
or classes of stock, whether by capital reorganization,
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reclassification or otherwise, or in the event the Company shall
at any time issue Common Stock by way of dividend or other
distribution on any stock of the Company, or subdivide or combine
the outstanding shares of Common Stock, then in each such event
the Holder of this Warrant shall have the right thereafter to
exercise such Warrant and receive the kind and amount of shares
of stock and other securities and property receivable upon such
reorganization, reclassification or other change by holders of
the number of shares of Common Stock into which such Warrant
might have been exercised immediately prior to such
reorganization, reclassification or change. In the case of any
such reorganization, reclassification or change, the Exercise
Price shall also be appropriately adjusted so as to maintain the
aggregate Exercise Price. Further, in case of any consolidation
or merger of the Company with or into another corporation in
which consolidation or merger the Company is not the continuing
corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety, or
substantially as an entirety, the Company shall cause effective
provision to be made so that the Warrantholder shall have the
right thereafter, by exercising this Warrant, to purchase the
kind and amount of shares of stock and other securities and
property receivable upon such consolidation, merger, sale or
conveyance by holders of the number of shares of Common Stock
into which such Warrant might have been exercised immediately
prior to such consolidation, merger, sale or conveyance, which
provision shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for
in this Warrant. The foregoing provisions shall similarly apply
to successive reclassifications, capital reorganizations and
changes of shares of Common Stock and to successive
consolidations, mergers, sale or conveyances. Notwithstanding
the foregoing, no adjustment of the Exercise Price shall be made
as a result of or in connection with (1) the issuance of Common
Stock of the Company pursuant to options, warrants and share
purchase agreements now in effect or hereafter outstanding or
created, (2) the establishment of option plans of the Company,
the modification, renewal or extension of any plan now in effect
or hereafter created, or the issuance of Common Stock upon
exercise of any options pursuant to such plans, (3) the issuance
of Common Stock in connection with an acquisition, consolidation
or merger
of any type in which the Company is the continuing corporation,
or (4) the issuance of Common Stock in consideration of such
cash, property or service as may be approved by the Board of
Directors of the Company and permitted by applicable law.
4. ADJUSTMENT TO PURCHASE PRICE. The Company may, in its
sole discretion, lower the purchase price at any time, or from
time to time. When any adjustment is made in the purchase price,
the Company shall cause a copy of such statement to be mailed to
the Warrantholder, as of a date within thirty (30) days after the
date when the purchase price has been adjusted.
5. MANNER OF EXERCISE. The Warrantholder may exercise all or
any whole number of such Warrants during the Exercise Period in the
manner stated herein. This Warrant Certificate, together with
the purchase form provided herein duly executed by the
Warrantholder or by the Warrantholder's duly authorized attorney,
plus payment of the exercise price in the manner set forth in
paragraph 6, below shall be surrendered to the Company. If upon
exercise of any Warrants evidenced by this Warrant Certificate
the number of Warrants exercised shall be less than the total
number of Warrants evidenced, there shall be issued to the
2
<PAGE>
Warrantholder a new Warrant Certificate evidencing the number of
Warrants not so exercised.
6. MANNER OF PAYMENT. The Exercise Price of each Warrant
shall be payable in lawful money of the United States of America
in cash or by check or by certified check or by bank draft
payable to the order of the Company.
7. RESERVATION OF COMMON STOCK. The Company agrees that
the number of shares of Common Stock sufficient to provide for
the exercise of the Warrant upon the basis herein set forth will
at all times during the term of this Warrant be reserved for the
exercise thereof.
8. ISSUANCE OF COMMON STOCK UPON EXERCISE. The Company, at
its expense, shall cause to be issued, within ten (10) days after
exercise of this Warrant, a certificate or certificates in the
name requested by the Warrantholder of the number of shares of
Common Stock to which the Warrantholder is entitled upon such
exercise. All shares of Common Stock or other securities
delivered upon exercise of the Warrants shall be validly issued,
fully paid and non-assessable.
9. NO RIGHT AS STOCKHOLDER. The Warrantholder is not, by
virtue of ownership of the Warrant, entitled to any rights
whatsoever of a stockholder of the Company.
10. ASSIGNMENT. This Warrant is freely assignable by the
Warrantholder hereof, subject to restrictions imposed by the
Securities Act of 1933, as amended and applicable state securities
laws.
11. WARRANT REDEMPTION. The Company has the right to redeem
the Warrants upon thirty (30) days notice to the Warrantholders
at a redemption price of $.001 per warrant. Notice of the
Company's decision to redeem the Warrants shall be given to the
holders by regular mail at the last known address maintained by
the Company. The failure of the holder of such warrants to
purchase the Common Stock within the thirty (30) day period will
result in such holders' forfeiture of the right to purchase the
Common Stock underlying the Warrants.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be signed by its President and by its Secretary,
each by a facsimile of his signature, and has caused a facsimile
of its corporate seal to be imprinted hereon.
Dated: 6/12/98
-------
By: /s/ Joseph F. DeBerry By: /s/ Roger K. Burnett
_________________________ ________________________
Assistant Secretary President
3
<PAGE>
FORM OF ELECTION
(To be executed by the Registered Holder if he desires to
exercise Warrants evidenced by the within Warrant Certificate)
TO: Full Tilt Sports, Inc.
The undersigned hereby irrevocably elects to exercise
____________________ Warrants, evidenced by the within Warrant
Certificate for, and to purchase thereunder _________________
full Common Shares issuable upon exercise of said Warrants and
delivery of $________________________ and any applicable taxes.
The undersigned requests that certificates for such shares
be issued in the name of:
_______________________________ PLEASE INSERT SOCIAL SECURITY
(Please print name and address) OR TAX IDENTIFICATION NUMBER:
_______________________________ _____________________________
_______________________________
If said number of Warrants shall not be all the Warrants
evidenced by the within Warrant Certificate, the undersigned
requests that a new Warrant Certificate evidencing the Warrants
not so exercised be issued in the name of and delivered to:
_______________________________ PLEASE INSERT SOCIAL SECURITY
(Please print name and address) OR TAX IDENTIFICATION NUMBER:
_______________________________ ______________________________
Dated: ________________________ Signature: ___________________
NOTICE: The above signature must correspond with the name
as written upon the face of the within Warrant Certificate in
every particular, without alteration or enlargement or any change
whatsoever, or if signed by any other person the Form of
Assignment hereon must be duly executed and if the certificate
representing the shares or any Warrant Certificate representing
Warrants not exercised is to be registered in a name other than
that in which the within Warrant Certificate is registered, the
signature of the holder hereof must be guaranteed.
Signature Guaranteed: _________________________________________
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER
FIRM OR ONE OF THE FOLLOWING STOCK EXCHANGES: NEW YOR EXCHANGE,
PACIFIC COAST STOCK EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST
STOCK EXCHANGE.
_________________________________________________________________
FORM OF ASSIGNMENT
(To be executed by the Registered Holder if he desires to assign
Warrants evidenced by the within Warrant Certificate)
FOR VALUE RECEIVED, ______________________________ hereby
sells, assigns and transfers unto ______________________________,
(#) _________________Warrants, evidenced by the within Warrant
Certificate, and does hereby irrevocably constitute and appoint
___________________ Attorney to transfer the said Warrant
evidenced by the within Warrant Certificate on the books of the
Company, with full power of substitution.
Dated: _________________ Signature:_______________________
_________________________________
(Please Print Name)
NOTICE: The above signature must correspond with the name
as written upon the face of the within Warrant Certificate in
every particular, without alteration or enlargement or any change
whatsoever.
Signature Guaranteed: _________________________________________
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER
FIRM OR ONE OF THE FOLLOWING STOCK EXCHANGES: NEW YOR EXCHANGE,
PACIFIC COAST STOCK EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST
STOCK EXCHANGE.
4
PART III
EXHIBIT 6.1
EMPLOYMENT AGREEMENT
BY AND BETWEEN THE COMPANY
AND ROGER K. BURNETT
DATED
AUGUST 5, 1997
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), effective as of
the 5th day of August 1997, by and between FULL TILT SPORTS,
INC., a Colorado corporation with its principal place of business
located at 5525 Erindale Drive, Suite 201, Colorado Springs,
Colorado 80918 (hereinafter referred to as "Company" or
"Employer") and Roger K. Burnett (hereinafter referred to as the
"Employee").
The Company hereby employs the Employee and the Employee
hereby accepts employment on the terms and conditions hereinafter
set forth.
1. Term. Subject to the provisions for termination
hereinafter provided, the initial term of this Agreement shall
commence on September 1, 1997 and terminate on August 31, 1998,
and shall continue thereafter on a year to year basis unless
terminated by the Company by delivery of written notice to the
Employee not later than thirty (90) days prior to the date for
termination as indicated in said notice.
2. Compensation and Performance Review
(a) For all services rendered by the Employee under
this Agreement, commencing September 1, 1997, the Company shall
be obligated to pay the Employee a salary of $30,000 per annum,
payable in accordance with the Employer's regular payroll
procedure.
(b) Following the first anniversary of this Agreement
(namely, on September 1, 1998, or as soon thereafter as
practicable), and following each anniversary, if any, thereafter,
the Company shall grant the Employee a performance and salary
review for the purposes of gauging the performance of the
Employee for the preceding year and adjusting the salary of the
Employee hereunder looking to the results of such review and the
Company's financial progress, among other things, as guides in
such adjustments; provided, however, compensation payable to the
Employee pursuant to this provision shall in no event be reduced
from that fixed by Subparagraph (a) in this Section 2.
3. Duties. Employee is engaged as the President and
Chief Executive Officer of the Company. In such capacities,
Employee shall exercise detailed supervision over the operations
of the Company subject, however, to control by the Board of
Directors. The Employee shall perform all duties incident to the
title of President and Chief Executive Officer and such other
duties as from time to time may be assigned to him by the Board
of Directors.
4. Best Efforts of Employee. The Employee shall
devote his full time efforts to the business of the Company and
to all of the duties that may be required by the terms of this
Agreement to the reasonable satisfaction of the Company. The
Employee shall at all times faithfully, with diligence and to the
1
<PAGE>
best of his ability, experience and talents, perform all the
duties that may be required of and from him pursuant to the
express and implicit terms hereof to the reasonable satisfaction
of the Company. Such services shall be rendered at such other
place or places as the Company shall in good faith require or as
the interest, needs, business or opportunity of the Company shall
require. The Employee agrees not to engage in any employment or
consulting work or any trade or business for his account or for
or on behalf of any other person, firm or corporation, unless the
Employee obtains prior written consent from the Board of
Directors of the Company.
5. Working Facilities. The Employee shall be
furnished with all such facilities and services suitable to his
position and adequate for the performance of his duties.
6. Expenses. The Employee is authorized to incur
reasonable expenses for promoting the business of the Company,
including his out-of-pocket expenses for entertainment, travel
and similar items. The Company shall reimburse the Employee for
all such expenses on the presentation by the Employee, from time
to time, of an itemized account of such expenditures in
accordance with the guidelines set forth by the Internal Revenue
Service for travel and entertainment.
7. Vacation. The Employee shall be entitled each year
to a vacation of a reasonable amount during which time his
compensation shall be paid in full.
8. Disability.
(a) Should the Employee, by reason of illness or
incapacity, be unable to perform his job for a period of up to
and including a maximum of 3 months, the compensation payable to
him for and during such period under this Agreement shall be
unabated. The Board of Directors shall have the right to
determine the incapacity of the Employee for the purposes of this
provision, and any such determination shall be evidenced by its
written opinion delivered to the Employee. Such written opinion
shall specify with particularity the reasons supporting such
opinion and be manually signed by at least a majority of the
Board.
(b) The Employee's compensation thereafter shall be
reduced to zero. The Employee shall receive full compensation
upon his return to employment and regular discharge of his full
duties hereunder. Should the Employee be absent from his
employment for whatever cause for a continuous period of more
than 365 calendar days, the Company may terminate this Agreement
and all obligations of the Company hereunder shall cease upon
such termination.
9. Termination.
2
<PAGE>
(a) The Company may terminate this Agreement with
cause at any time under immediate notice to the Employee thereof,
and such notice having been given, this Agreement shall
terminate in accordance therewith. For the purpose of this
section, "cause" shall be defined as meaning such conduct by the
Employee which constitutes in fact and/or law a breach of
fiduciary duty or felonious conduct having the effect, in the
opinion of the Board of Directors, of materially adversely
affecting the Company and/or its reputation.
(b) The Company may terminate this Agreement without
cause by giving 90 days written notice to the Employee, and such
notice having been given, this Agreement shall terminate in
accordance therewith.
(c) The Employee may terminate this Agreement without
cause by giving 90 days written notice to the Company, and such
notice having been given, this Agreement shall terminate in
accordance therewith.
(d) In the event of termination herein, the Employee
shall be entitled to receive compensation based upon his prorated
salary, up and until the date of termination. After the date of
termination, the Employee shall not be entitled to receive
additional compensation of any kind or nature from the Employer
and all benefit and incentive programs then in place shall
terminate.
10. Confidentiality. The Employee shall not divulge
to others any information he may obtain during the course of his
employment relating to the business of the Company without first
obtaining written permission of the Company.
11. Notices. All notices, demands, elections,
opinions or requests (however characterized or described)
required or authorized hereunder shall be deemed given
sufficiently if in writing and sent by registered or certified
mail, return receipt requested and postage prepaid, or by tested
telex, telegram or cable to, in the case of the Company:
Full Tilt Sports, Inc.
5525 Erindale Drive, Suite 201
Colorado Springs, Colorado 80918
and in the case of the Employee:
Mr. Roger K. Burnett
4155 Douglas Valley
U.S. Air Force Academy, Colorado 80840
12. Assignment of Agreement. No party may assign or
otherwise transfer this Agreement or any of its rights or
obligations hereunder without the prior written consent to such
assignment or transfer by the other party hereto; and all the
provisions of this Agreement shall be binding upon the respective
3
<PAGE>
employees, delegates, successors, heirs and assigns of the
parties.
13. Survival of Representations, Warranties and
Covenants. This Agreement and the representations, warranties,
covenants and other agreements (however characterized or
described) by both parties hereto and contained herein or made
pursuant to the provisions hereof shall survive the execution and
delivery of this Agreement and any inspection or investigation
made at any time with respect to any thereof until any and all
monies, payments, obligations and liabilities which either party
hereto shall have made, incurred or become liable for pursuant to
the terms of this Agreement shall have been paid in full.
14. Further Instruments. The parties shall execute
and deliver any and all such other instruments and shall take any
and all such other actions as may be reasonably necessary to
carry the intent of this Agreement into full force and effect.
15. Severability. If any provisions of this Agreement
shall be held, declared or pronounced void, voidable, invalid,
unenforceable or inoperative for any reason by any court of
competent jurisdiction, government authority or otherwise, such
holding, declaration or pronouncement shall not affect adversely
any other provision of this Agreement, which shall otherwise
remain in full force and effect and be enforced in accordance
with its terms and the effect of such holding, declaration or
pronouncement shall be limited to the territory or jurisdiction
in which made.
16. Waiver. All the rights and remedies of either
party under this Agreement are cumulative and not exclusive of
any other rights and remedies provided by law. No delay or
failure on the part of either party in the exercise of any right
or remedy arising from a breach of this Agreement shall operate
as a waiver of any subsequent right or remedy arising from a
subsequent breach of this Agreement. The consent of any party
where required hereunder to any act of occurrence shall not be
deemed to be a consent to any other act of occurrence.
17. General Provisions. This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the
State of Colorado. Except as otherwise expressly stated herein,
time is of the essence in performing hereunder. This Agreement
embodies the entire agreement and understanding between the
parties and supersedes all prior agreements and understanding
relating to the subject matter hereof, and this Agreement may not
be modified or amended or any term of provision hereof waived or
discharged except in writing signed by the party against whom
4
<PAGE>
such amendment, modification, waiver of discharge is sought to be
enforced. The headings of this Agreement are for convenience in
reference only and shall not limit or otherwise affect the
meaning thereof. The Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all
of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
THE COMPANY: THE EMPLOYEE:
FULL TILT SPORTS, INC.
By:
/s/ Joseph F. DeBerry /s/ Roger K. Burnett
_________________________________ ______________________________
Joseph F. DeBerry, Vice President Roger K.Burnett
5
PART III
EXHIBIT 6.2
EMPLOYMENT AGREEMENT
BY AND BETWEEN THE COMPANY
AND JOSEPH F. DeBERRY
DATED
AUGUST 5, 1997
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), effective as of
the 5th day of August 1997, by and between FULL TILT SPORTS,
INC., a Colorado corporation with its principal place of business
located at 5525 Erindale Drive, Suite 201, Colorado Springs,
Colorado 80918 (hereinafter referred to as "Company" or
"Employer") and Joseph F. DeBerry (hereinafter referred to as the
"Employee").
The Company hereby employs the Employee and the Employee
hereby accepts employment on the terms and conditions hereinafter
set forth.
1. Term. Subject to the provisions for termination
hereinafter provided, the initial term of this Agreement shall
commence on September 1, 1997 and terminate on August 31, 1998,
and shall continue thereafter on a year to year basis unless
terminated by the Company by delivery of written notice to the
Employee not later than thirty (90) days prior to the date for
termination as indicated in said notice.
2. Compensation and Performance Review
(a) For all services rendered by the Employee under
this Agreement, commencing September 1, 1997, the Company shall
be obligated to pay the Employee a salary of $30,000 per annum,
payable in accordance with the Employer's regular payroll
procedure.
(b) Following the first anniversary of this Agreement
(namely, on September 1, 1998, or as soon thereafter as
practicable), and following each anniversary, if any, thereafter,
the Company shall grant the Employee a performance and salary
review for the purposes of gauging the performance of the
Employee for the preceding year and adjusting the salary of the
Employee hereunder looking to the results of such review and the
Company's financial progress, among other things, as guides in
such adjustments; provided, however, compensation payable to the
Employee pursuant to this provision shall in no event be reduced
from that fixed by Subparagraph (a) in this Section 2.
3. Duties. Employee is engaged as the Vice President
of the Company. In such capacities, Employee shall exercise
detailed supervision over the operations of the Company subject,
however, to control by the Board of Directors. The Employee
shall perform all duties incident to the title of Vice President
and such other duties as from time to time may be assigned to him
by the Board of Directors.
4. Best Efforts of Employee. The Employee shall
devote his full time efforts to the business of the Company and
to all of the duties that may be required by the terms of this
Agreement to the reasonable satisfaction of the Company. The
1
<PAGE>
Employee shall at all times faithfully, with diligence and to the
best of his ability, experience and talents, perform all the
duties that may be required of and from him pursuant to the
express and implicit terms hereof to the reasonable satisfaction
of the Company. Such services shall be rendered at such other
place or places as the Company shall in good faith require or as
the interest, needs, business or opportunity of the Company shall
require. The Employee agrees not to engage in any employment or
consulting work or any trade or business for his account or for
or on behalf of any other person, firm or corporation, unless the
Employee obtains prior written consent from the Board of
Directors of the Company.
5. Working Facilities. The Employee shall be
furnished with all such facilities and services suitable to his
position and adequate for the performance of his duties.
6. Expenses. The Employee is authorized to incur
reasonable expenses for promoting the business of the Company,
including his out-of-pocket expenses for entertainment, travel
and similar items. The Company shall reimburse the Employee for
all such expenses on the presentation by the Employee, from time
to time, of an itemized account of such expenditures in
accordance with the guidelines set forth by the Internal Revenue
Service for travel and entertainment.
7. Vacation. The Employee shall be entitled each year
to a vacation of a reasonable amount during which time his
compensation shall be paid in full.
8. Disability.
(a) Should the Employee, by reason of illness or
incapacity, be unable to perform his job for a period of up to
and including a maximum of 3 months, the compensation payable to
him for and during such period under this Agreement shall be
unabated. The Board of Directors shall have the right to
determine the incapacity of the Employee for the purposes of this
provision, and any such determination shall be evidenced by its
written opinion delivered to the Employee. Such written opinion
shall specify with particularity the reasons supporting such
opinion and be manually signed by at least a majority of the
Board.
(b) The Employee's compensation thereafter shall be
reduced to zero. The Employee shall receive full compensation
upon his return to employment and regular discharge of his full
duties hereunder. Should the Employee be absent from his
employment for whatever cause for a continuous period of more
than 365 calendar days, the Company may terminate this Agreement
and all obligations of the Company hereunder shall cease upon
such termination.
2
<PAGE>
9. Termination.
(a) The Company may terminate this Agreement with
cause at any time under immediate notice to the Employee thereof,
and such notice having been given, this Agreement shall
terminate in accordance therewith. For the purpose of this
section, "cause" shall be defined as meaning such conduct by the
Employee which constitutes in fact and/or law a breach of
fiduciary duty or felonious conduct having the effect, in the
opinion of the Board of Directors, of materially adversely
affecting the Company and/or its reputation.
(b) The Company may terminate this Agreement without
cause by giving 90 days written notice to the Employee, and such
notice having been given, this Agreement shall terminate in
accordance therewith.
(c) The Employee may terminate this Agreement without
cause by giving 90 days written notice to the Company, and such
notice having been given, this Agreement shall terminate in
accordance therewith.
(d) In the event of termination herein, the Employee
shall be entitled to receive compensation based upon his prorated
salary, up and until the date of termination. After the date of
termination, the Employee shall not be entitled to receive
additional compensation of any kind or nature from the Employer
and all benefit and incentive programs then in place shall
terminate.
10. Confidentiality. The Employee shall not divulge
to others any information he may obtain during the course of his
employment relating to the business of the Company without first
obtaining written permission of the Company.
11. Notices. All notices, demands, elections,
opinions or requests (however characterized or described)
required or authorized hereunder shall be deemed given
sufficiently if in writing and sent by registered or certified
mail, return receipt requested and postage prepaid, or by tested
telex, telegram or cable to, in the case of the Company:
Full Tilt Sports, Inc.
5525 Erindale Drive, Suite 201
Colorado Springs, Colorado 80918
and in the case of the Employee:
Mr. Joseph F. DeBerry
4155 Douglas Valley
U.S. Air Force Academy, Colorado 80840
3
<PAGE>
12. Assignment of Agreement. No party may assign or
otherwise transfer this Agreement or any of its rights or
obligations hereunder without the prior written consent to such
assignment or transfer by the other party hereto; and all the
provisions of this Agreement shall be binding upon the respective
employees, delegates, successors, heirs and assigns of the
parties.
13. Survival of Representations, Warranties and
Covenants. This Agreement and the representations, warranties,
covenants and other agreements (however characterized or
described) by both parties hereto and contained herein or made
pursuant to the provisions hereof shall survive the execution and
delivery of this Agreement and any inspection or investigation
made at any time with respect to any thereof until any and all
monies, payments, obligations and liabilities which either party
hereto shall have made, incurred or become liable for pursuant to
the terms of this Agreement shall have been paid in full.
14. Further Instruments. The parties shall execute
and deliver any and all such other instruments and shall take any
and all such other actions as may be reasonably necessary to
carry the intent of this Agreement into full force and effect.
15. Severability. If any provisions of this Agreement
shall be held, declared or pronounced void, voidable, invalid,
unenforceable or inoperative for any reason by any court of
competent jurisdiction, government authority or otherwise, such
holding, declaration or pronouncement shall not affect adversely
any other provision of this Agreement, which shall otherwise
remain in full force and effect and be enforced in accordance
with its terms and the effect of such holding, declaration or
pronouncement shall be limited to the territory or jurisdiction
in which made.
16. Waiver. All the rights and remedies of either
party under this Agreement are cumulative and not exclusive of
any other rights and remedies provided by law. No delay or
failure on the part of either party in the exercise of any right
or remedy arising from a breach of this Agreement shall operate
as a waiver of any subsequent right or remedy arising from a
subsequent breach of this Agreement. The consent of any party
where required hereunder to any act of occurrence shall not be
deemed to be a consent to any other act of occurrence.
17. General Provisions. This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the
State of Colorado. Except as otherwise expressly stated herein,
4
<PAGE>
time is of the essence in performing hereunder. This Agreement
embodies the entire agreement and understanding between the
parties and supersedes all prior agreements and understanding
relating to the subject matter hereof, and this Agreement may not
be modified or amended or any term of provision hereof waived or
discharged except in writing signed by the party against whom
such amendment, modification, waiver of discharge is sought to be
enforced. The headings of this Agreement are for convenience in
reference only and shall not limit or otherwise affect the
meaning thereof. The Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all
of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
THE COMPANY: THE EMPLOYEE:
FULL TILT SPORTS, INC.
By:
/s/ Roger K. Burnett /s/ Joseph F. DeBerry
___________________________ __________________________
Roger K. Burnett, President Joseph F. DeBerry
5
PART III
EXHIBIT 6.3
NON-QUALIFIED STOCK OPTION AND STOCK GRANT PLAN
DATED
JULY 1, 1998
<PAGE>
FULL TILT SPORTS, INC.
NON-QUALIFIED STOCK OPTION AND STOCK GRANT PLAN
This Non-Qualified Stock Option and Stock Grant Plan (the
"Plan") is effective this 1st day of July, 1997, in
consideration of services rendered and to be rendered by key
personnel to Full Tilt Sports, Inc., its subsidiaries and
affiliates.
1. Definitions.
The terms used in this Plan shall, unless otherwise
indicated or required by the particular context, have the
following meanings:
Board: The Board of Directors of Full Tilt Sports, Inc., or
any duly authorized committee of the Board.
Common Stock: The $.001 par value Common Stock of Full Tilt
Sports, Inc..
Company: Full Tilt Sports, Inc., a corporation incorporated
under the laws of Colorado, and any successors in interest by
merger, operation of law, assignment or purchase of all or
substantially all of the property, assets or business of the
Company.
Date of Grant: The date on which an Option (see below) is
granted under the Plan.
Fair Market Value: The Fair Market Value of the Option
Shares. Such Fair Market Value as of any date shall be
reasonably determined by the Board; provided, however, that if
there is a public market for the Common Stock, the Fair Market
Value of the Option Shares as of any date shall not be less than
the bid price for the Common Stock on that date (or on the
preceding business day if such date is a Saturday, Sunday, or a
holiday), on either an over-the-counter market or national
exchange, as reported thereby, or if not available there, in the
Wall Street Journal or other public news source; provided,
further, that if no such published bid price is available, the
Fair Market Value of such shares shall not be less than the
average of the means between the bid and asked prices quoted on
that date by any two independent persons or entities making a
market for the Common Stock, such persons or entities to be
selected by the Board. Fair Market Value shall be determined
without regard to any restriction other than a restriction which,
by its terms, will never lapse.
Key Person: A person (including, without limitation,
employees, directors, officers, consultants or advisors)
designated by the Board upon whose judgment, initiative and
efforts the Company or a Related Company may rely.
Option: The rights granted to a Key Person to purchase
Common Stock pursuant to the terms and conditions of an Option
Agreement (see below).
1
<PAGE>
Option Agreement: The written agreement (and any amendment
or supplement thereto) between the Company and a Key Person
designating the terms and conditions of an Option.
Option Shares: The shares of Common Stock underlying an
Option granted to a Key Person.
Optionee: A Key Person who has been granted an Option.
Recipient: A Key Person who has been granted a Stock Grant.
Related Company: Any subsidiary or affiliate of the
Company. The determination of whether a corporation is a Related
Company shall be made without regard to whether the entity or the
relationship between the entity and the Company now exists or
comes into existence hereafter.
Stock Grant: The grant of shares of the Company's Common
Stock to a Key Person pursuant to the terms of the Plan.
Stock Grant Shares: The shares of Common Stock represented
by a Stock Grant.
2. Purpose and Scope.
(a) The purpose of the Plan is to advance the interests of
the Company and its stockholders by affording Key Persons, upon
whose judgment, initiative and efforts the Company may rely for
the successful conduct of their businesses, an opportunity for
investment in the Company and the incentive advantages inherent
in stock ownership in the Company.
(b) This Plan authorizes the Board to grant Options and
make Stock Grants to Key Persons selected by the Board while
considering criteria such as employment position or other
relationship with the Company, duties and responsibilities,
ability, productivity, length of service or association, morale,
interest in the Company, recommendations by supervisors, and
other matters.
3. Administration of the Plan.
The Plan shall be administered by the Board. The Board
shall have the authority granted to it under this section and
under each other section of the Plan.
In accordance with and subject to the provisions of the
Plan, the Board shall select the Optionees and Recipients, shall
determine (i) the number of shares of Common Stock to be subject
to each Option and/or Stock Grant, (ii) the time at which each
Option and/or Stock Grant is to be granted, (iii) whether an
Option shall be granted in exchange for the cancellation and
termination of a previously granted option or options under the
Plan or otherwise, (iv) the purchase price for Option Shares, (v)
the option period, (vi) the consideration (if any) for a Stock
Grant, and (vii) the manner in which an Option becomes
exercisable. In addition, the Board shall fix such other terms
of each Option and/or Stock Grant as it may deem necessary or
desirable. The Board shall determine the form of Option
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Agreement to evidence each Option.
The Board from time to time may adopt such rules and
regulations for carrying out the purposes of the Plan as it may
deem proper and in the best interests of the Company.
The Board may from time to time make such changes in and
additions to the Plan as it may deem proper and in the best
interest of the Company provided, however, that no such change or
addition shall impair any Option or Stock Grant previously
granted under the Plan.
Each determination, interpretation or other action made or
taken by the Board shall be final, conclusive and binding on all
persons, including without limitation, the Company, the Related
Companies, the stockholders, directors, officers and employees of
the Company and the Related Companies, and the Optionees, the
Recipients and their respective successors in interest.
4. The Common Stock.
The Board is authorized to appropriate, grant Options and
make Stock Grants with respect to, and otherwise issue and sell
for the purposes of the Plan, a total number not in excess of
1,000,000 shares of Common Stock, either treasury or authorized
but unissued, or the number and kind of shares of stock or other
securities which in accordance with Section 9 shall be
substituted for the 1,000,000 shares or into which such 1,000,000
shares shall be adjusted. All or any unsold shares subject to an
Option that for any reason expires or otherwise terminates may
again be made subject to Options and Stock Grants under the Plan.
5. Eligibility.
Options and Stock Grants shall be granted only to Key
Persons. Key Persons may hold more than one Option or Stock
Grant under the Plan and may hold Options and Stock Grants under
the Plan and options granted pursuant to other plans or
otherwise.
6. Option Price.
The Board shall determine the purchase price for the Option
Shares; provided, however, that the purchase price to be paid by
Optionees for Option Shares shall not be less than one hundred
percent of the Fair Market Value of the Option Shares on the Date
of Grant.
7. Duration and Exercise of Options.
(a) The option period shall commence on the Date of Grant
and shall be up to 10 years in length subject to the limitations
in this Section 7 and the Option Agreement.
(b) During the lifetime of the Optionee, the Option shall
be exercisable only by the Optionee. Any Option held by an
Optionee at the time of his death may be exercised by his estate
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only within six months of his death or such longer period as the
Board may determine.
(c) The Board may determine whether an Option shall be
exercisable as provided in Paragraph (a) of this Section 7 or
whether the Option shall be exercisable in installments only; if
the Board determines the latter, it shall determine the number of
installments and the percentage of the Option exercisable at each
installment date. All such installments shall be cumulative.
(d) In the case of an Optionee who is an employee of the
Company or a Related Company, if, for any reason, other than the
Optionee's death, the Optionee ceases to be employed by either
the Company or a Related Company, any option held by the Optionee
at the time his employment ceases may be exercised within 90 days
after the date that his employment ceased, (subject to the
limitations of Paragraph (a) above), but only to the extent that
the option was exercisable according to its terms on the date the
Optionee's employment ceased. After such 90 day period, any
unexercised portion of an Option shall expire.
(e) Notwithstanding the provision of Paragraph (d) of this
Section 7, in the case of an Optionee who is an employee of the
Company or a Related Company, if the Optionee's employment by the
Company or a Related Company ceases due to the Company's or
Related Company's termination of such Optionee's employment for
cause, any unexercised portion of any Option held by the Optionee
shall immediately expire.
(f) Each Option shall be exercised in whole or in part by
delivering to the office of the Treasurer of the Company written
notice of the number of shares with respect to which the Option
is to be exercised and by paying in full the purchase price for
the Option Shares purchased as set forth in Section 8; provided,
that an Option may not be exercised in part unless the purchase
price for the Option Shares Purchased is at least $1,000.00.
8. Payment for Option Shares.
If the purchase price of the Option Shares purchased by any
Optionee at one time exceeds $2,000, the Board may permit all or
part of the purchase price for the Option Shares to be paid by
delivery to the Company for cancellation shares of the Company's
Common Stock previously owned by the Optionee with a Fair Market
Value as of the date of the payment equal to the portion of the
purchase price for the Option Shares that the Optionee does not
pay in cash. In the case of all other Option exercises, the
purchase price shall be paid in cash or certified funds upon
exercise of the Option.
9. Merger, Consolidation, Stock Splits
(a). Stock Splits. The number of shares and exercise
price of the Option previously made subject to an Option and the
aggregate number of shares available for issuance under the Plan
shall be proportionately adjusted in the event of any stock
dividend, stock split, reverse stock split or other division or
combination of outstanding Common Stock.
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(b). Mergers. In the even of a merger or consolidation to
which the Company is a party and as a result of which the
stockholders of the Company immediately prior to the transaction
will own less than a majority of the combined voting power and
ownership interest of the surviving corporation immediately after
the transaction [i] all outstanding Options, whether or not
otherwise exercisable, shall become fully exercisable in respect
of all Common Stock covered thereby immediately prior to the
effective time of the transaction, contingent upon the
consummation of the transaction, and [ii] any Options not
exercised prior to the transaction shall automatically terminate
at the effective time of the transaction. The Board shall make
such arrangements as it deems appropriate to allow Optionees to
exercise their Options contingent upon the consummation of the
transaction, including, without limitation, establishing a cut-
off date in advance of the effective time of the transaction by
which Options must be exercised. In the event that the
transaction is not ultimately consummated, all exercised of
Options pursuant to this provision shall be of no force or
effect, the Company shall return to the Optionees all notices of
exercise, payments and other documents received by it in
connection with such exercise and all Options shall be
exercisable only in accordance with their original terms.
(c). Sale of Assets; Liquidation. In the event of a sale of
all or substantially all of the property of the Company, the sale
or exchange by the Company or any one or more stockholders of the
Company of Common Stock constituting of 50% or more of the Common
Stock outstanding immediately following such sale or exchange, or
the dissolution or liquidation of the Company, the Board may, in
its discretion, take such action with respect to outstanding
Options as it deems appropriate, including, without limitation
[i] accelerating the exercisability thereof, subject to such
procedures and conditions as it may determine, [ii] providing for
the termination of all unexercised Options as of the effective
date of the transaction or any other date established by the
Board [iii] providing for the conversion of outstanding Options
into options or other rights to acquire stock or other securities
or property of any entity acquiring all or any portion of the
Company's property or any Common Stock in the transaction, or any
Affiliate of such an entity, on terms deemed reasonable by the
Board in its sole discretion, or [iv] making cash payments to
Optionees in settlement of their Option in an amount equal to the
difference between the Fair Market Value of the Stock for which
they are then exercisable, or for all of the Common Stock covered
thereby, as the Board may determine, and the Option Price
thereof. The Board shall not be required to take any of the
foregoing actions and hall not be required to treat all
outstanding Options in the same manner.
(d). Fractional Shares. If , upon any exercise of an
Option, a fractional share of Stock would otherwise be issuable,
the Company shall, in lieu of issuing the fractional share, pay
the Optionee in cash the Fair Market value thereof as of the date
the Option was exercised.
10. Relationship to Employment.
Nothing contained in the Plan, or in any Option or Stock
Grant granted pursuant to the Plan, shall confer upon any
Optionee or Recipient any right with respect to employment by the
Company, or interfere in any way with the right of the Company to
terminate the Optionee's or Recipient's employment or services at
any time.
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11. Nontransferability of Option or Stock Grant.
No Option or Stock Grant granted under the Plan shall be
transferable by the Optionee or Recipient, either voluntarily or
involuntarily, except by will or the laws of descent and
distribution, and any attempt to do so shall be null and void.
12. Rights as a Stockholder.
No person shall have any rights as a stockholder with
respect to any share covered by an Option or Stock Grant until
that person shall become the holder of record of such shares and,
except as provided in Section 9, no adjustments shall be made for
dividends or other distributions or other rights as to which
there is an earlier record date.
13. Securities Laws Requirements.
No Option Shares or Stock Grants shall be issued unless and
until, in the opinion of the Company, any applicable registration
requirements of the Securities Act of 1933, as amended, any
applicable listing requirements of any securities exchange on
which stock of the same class is then listed, and any other
requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery, have been fully
complied with. Each Option and each Option and Stock Grant Share
certificate may be imprinted with legends reflecting federal and
state securities laws restrictions and conditions, and the
Company may comply therewith and issue "stop transfer"
instructions to its transfer agent and registrar in good faith
without liability.
14. Disposition of Shares.
Each Optionee, as a condition of exercise, and each
Recipient shall represent, warrant and agree, in a form of
written certificate approved by the Company, as follows: (a) that
all Option and Stock Grant Shares are being acquired solely for
his own account and not on behalf of any other person or entity;
(b) that no Option or Stock Grant Shares will be sold or
otherwise distributed in violation of the Securities Act of 1933,
as amended, or any other applicable federal or state securities
laws; (c) that if he is subject to reporting requirements under
Section 16(a) of the Securities Exchange Act of 1934, as amended,
he will (i) not sell any shares of Common Stock within six months
of the date he acquired any Option or Stock Grant, (ii) furnish
the Company with a copy of each Form 3, 4 or 5 filed by him, and
(iii) timely file all reports required under the federal
securities laws; and (d) that he will report all sales of Option
and/or Stock Grant Shares to the Company in writing on a form
prescribed by the Company.
15. Effective Date of Plan; Termination Date of Plan.
The Plan shall be deemed effective as of July 1, 1997. The
Plan shall terminate at midnight on June 30, 2007 except as to
Options previously granted and outstanding under the Plan at that
time. No Options or Stock Grants shall be granted after the date
on which the Plan terminates. The Plan may be amended, extended,
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abandoned or terminated at any earlier time by the Board, except
with respect to any Options or Stock Grant then outstanding under
the Plan.
16. Other Provisions.
The following provisions are also in effect under the Plan:
(a) The use of a masculine gender in the Plan shall also
include within its meaning the feminine, and the singular may
include the plural, and the plural may include the singular,
unless the context clearly indicates to the contrary.
(b) Any expense of administering the Plan shall be borne by
the Company.
(c) This Plan shall be construed to be in addition to any
and all other compensation plans or programs. The adoption of
the Plan by the Board shall not be construed as creating any
limitations on the power or authority of the Board to adopt such
other additional incentive or other compensation arrangements as
the Board may deem necessary or desirable.
(d) The validity, construction, interpretation,
administration and effect of the Plan and of its rules and
regulations, and the rights of any and all personnel having or
claiming to have an interest therein or thereunder shall be
governed by and determined exclusively and solely in accordance
with the laws of the state of Colorado.
IN WITNESS WHEREOF, the Company adopts this Plan on the date
first set forth above.
FULL TILT SPORTS, INC.
By:
/s/ Roger K. Burnett
___________________________
Roger K. Burnett, President
7
PART III
EXHIBIT 6.4
STOCK OPTION AGREEMENT
<PAGE>
FULL TILT SPORTS, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into as of____________, 1997 (the "Date of Grant"), by
and between Full Tilt Sports, Inc., a Colorado corporation (the
"Company"), and _____________ ("Optionee").
WITNESSETH:
WHEREAS, effective, __________________, the Board of
Directors determined that the Optionee should receive an option
to purchase shares of the Company's Common Stock under the
Company's Non-Qualified Stock Option and Stock Grant Plan in
order to provide the Optionee with an opportunity for investment
in the Company and additional incentive to pursue the success of
the Company, said option to be for the number of shares, at the
price per share and on the terms set forth in this Agreement; and
WHEREAS, Optionee desires to receive an option on the terms
and conditions set forth in this Agreement and agrees to perform
the services requested by the Company.
NOW, THEREFORE, the parties agree as follows:
1. Stock Option Plan. This agreement is granted pursuant
to, and is subject to the terms and conditions of the Full Tilt
Sports Non-Qualified Stock Option and Stock Grant Plan dated July
1, 1997 (the "Plan"). All conditions of the Plan , except as
may be modified herein, shall goven the rights of Optionee under
this Agreement.
2. Grant of Option. The Company hereby grants to Optionee,
as a matter of separate agreement and not in lieu of salary or
any other compensation for service, the right and option (the
"Option") to purchase all or any part of an aggregate of
shares of reserved authorized and unissued $.001 par value Common
Stock of the Company subject to adjustment as hereinafter set
forth (the "Option Shares"), pursuant to the terms and conditions
set forth in this Agreement.
3. Option Price. At any time when shares are to be
purchased pursuant to the Option, the purchase price for each
Option Share shall be $ ___________ subject to adjustment as
hereinafter set forth (the "Option Price").
4 Option Period. The Option period shall commence as of
the Date of Grant and shall terminate __________________________.
5. Exercise of Option.
(a) The Option may be exercised by delivering to the
Company:
(i) a Notice and Agreement of Exercise of Option,
substantially in the form attached hereto as Exhibit A,
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specifying the number of Option Shares with respect to
which the Option is exercised; and
(ii) full payment of the Option Price for such shares.
(b) Notwithstanding the foregoing, an Option may not be
exercised in part unless the purchase price of the Option Shares
purchased is at least $1,000.00.
(c) Promptly upon receipt of the Notice of Agreement and
Exercise and the finial payment of the Option Price by the
Optionee (including payment or provision for payment of any
applicable withholding or similar taxes), the Company shall
deliver to the Optionee a properly executed certificate or
certificates representing the Option Shares being purchased.
(d) The Optionee shall report all sales of Option shares to
the Company in writing on a form prescribed by the Company.
6. Transferability of Option. The Option shall not be
transferable except by will or the laws of descent and
distribution, and any attempt to do so shall void the Option.
7. Adjustment By Stock Split, Stock Dividend, Etc. If at
any time the Company increases or decreases the number of its
outstanding shares of Common Stock, or changes in any way the
rights and privileges of such shares, by means of the payment of
a stock dividend or the making of any other distribution on such
shares payable in its Common Stock, or through a stock split or
subdivision of shares, or a consolidation or combination of
shares, or through a reclassification or recapitalization
involving its Common Stock, the numbers, rights, and privileges
of the shares of Common Stock included in the Option shall be
increased, decreased or changed in like manner as if such shares
had been issued and outstanding, fully paid and nonassessable at
the time of such occurrence.
8. Common Stock To Be Received Upon Exercise. Optionee
understands that the Option Shares represent restricted
securities with in the meaning of the 1933 Act, have not been
registered and that the Company is under no obligation to
register the Option Shares under the 1933 Act, and that in the
absence of any such registration, the Option Shares cannot be
sold unless they are sold pursuant to an exemption from
registration under the Act. The Company is under no obligation
to comply, or to assist the Optionee in complying with any
exemption from such registration requirement, including supplying
the Optionee with any information necessary to permit routines
sales of the Stock under Rule 144 of the Securities and Exchange
Commission. Optionee also understands that with respect to Rule
144, routine sales of securities made in reliance upon such Rule
can only be made in limited amounts in accordance with the terms
and conditions of the Rule, and that in cases in which the Rule
is inapplicable, compliance with either Regulation A or another
disclosure exemption under the Act will be required. Thus, the
Option Shares will have to be held indefinitely in the absence of
registration under the Act or an exemption from registration.
Furthermore the Optionee fully understands that the
Option Shares have not been registered under the Act and that
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<PAGE>
they will be issued in reliance upon an exemption which is
available only if Optionee acquires such shares for investment
and not with a view to distribution. Optionee is familiar with
the phrase "acquired for investment and not with a view to
distribution" as it relates to the Act and the special meaning
given to such term in various release of the Securities and
Exchange Commission.
The forgoing restrictions or notices thereof may be placed
on the certificates representing the Option Shares purchased
pursuant to the Option and the Company may refuse to issue the
certificates or to transfer the shares on its books unless it is
satisfied that no violation of such restrictions will occur.
9. Privilege of Ownership. Optionee shall not have any of
the rights of a shareholder with respect to the shares covered by
the Option except to the extent that one or more certificates for
such shares shall be delivered to him upon exercise of the
Option.
10. Notices. Any notices required or permitted to be given
under this Agreement shall be in writing and they shall be deemed
to be given upon receipt by sender or sender's return receipt for
acknowledgment of delivery of said notice by postage prepaid
registered mail. Such notice shall be addressed to the party to
be notified as shown below:
Company: Full Tilt Sports, Inc.
5525 Erindale Drive, Suite 201
Colorado Springs, Colorado 80918
Optionee: ________________________________
________________________________
________________________________
Any party may change its address for purposes of this
paragraph by giving the other parties written notice of the new
address in the manner set forth above.
11. Miscellaneous. This Agreement and the Plan constitutes
the entire understanding of the parties with respect to the
subject matter herein. This Agreement shall be governed by the
laws of the State of Colorado. There are no representations,
promises, warranties, covenants or undertakings other than those
expressly set forth herein. No modification, waiver or
termination of any of the terms herein shall be valid unless in
writing and executed with the same formality as this Agreement.
No waiver by either party of any breach or default hereof by the
other shall be deemed to be a waiver of any preceding or
succeeding breach or default hereof, and no waiver shall be
operative unless the same shall be in writing. The headings
contained in this Agreement are for convenience of reference only
and shall not be deemed to alter or affect any provision hereof.
Should any provision of this agreement be declared invalid by a
court of competent jurisdiction, the remaining provisions hereof
shall remain in full force and effect regardless of such
declaration. In the event of any dispute or litigation between
the parties, the prevailing party shall be entitled to reasonable
3
<PAGE>
attorneys fees and costs. Time is of the essence.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the dates set forth below, to be effective as of the date and
year first above written.
COMPANY: OPTIONEE:
FULL TILT SPORTS, INC.
By:
______________________ _______________________
4
<PAGE>
EXHIBIT A
TO FULL TILT SPORTS, INC.
STOCK OPTION AGREEMENT
FULL TILT SPORTS, INC.
NOTICE AND AGREEMENT OF EXERCISE OF OPTION
I hereby exercise my Full Tilt Sports, Inc. Stock Option
dated _____________ as to _________________ shares of Full Tilt
Sports, Inc. $.001 par value Common Stock (the "Option Shares").
Enclosed are the documents and payment specified in Section
5 of my Option Agreement. I understand that no Option Shares will
be issued unless and until, in the opinion of Full Tilt Sports,
Inc. (the "Company"), any applicable registration requirements of
the Securities Act of 1933, as amended, any applicable listing
requirements of any securities exchange on which stock of the
same class is then listed, and any other requirements of law or
any regulatory bodies having jurisdiction over such issuance and
delivery, shall have been fully complied with. I hereby
acknowledge, represent, warrant and agree, to and with the
Company as follows:
(a) The Option Shares I am purchasing are being acquired for
my own account for investment purposes only and with no view to
their resale or other distribution of any kind, and no other
person (except, if I am married, my spouse) will own any interest
therein;
(b) I will not sell or dispose of my Option Shares in
violation of the Securities Act of 1933, as amended, or any other
applicable federal or state securities laws;
(c) If and so long as I am subject to reporting requirements
under Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), I recognize that any sale by me or
my immediate family of the Company's $.001 par value Common Stock
within six months before the date of grant of my Stock Option may
create liability for me under Section 16(b) of the Exchange Act
("Section 16 (b)");
(d) I have consulted with my counsel regarding the
application of Section 16 (b) to this exercise of my Option;
(e) I will consult with my counsel regarding the application
of Section 16(b) before I make any sale of the Company' s $.001
par value Common Stock, including the Option Shares;
(f) I will report all sales of Option Shares to the Company
in writing on a form prescribed by the Company;
(g) I will assist the Company in the filing of a Form 4 with
the Securities and Exchange Commission and will timely file all
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<PAGE>
reports that I may be required to file under the federal
securities laws; and
(h) I agree that the Company may, without liability for its
good faith actions, place legend restrictions upon my Option
Shares and issue "stop transfer" instructions requiring
compliance with applicable securities laws and the terms of my
Option.
The number of Option Shares specified above are to be issued
in the following registration.
______________________
address:
______________________
______________________
6
PART III
EXHIBIT 6.5
REAL ESTATE PURCHASE AGREEMENT
BY AND BETWEEN THE COMPANY
AND JAMES FISHER DeBERRY
DATED
AUGUST 4, 1997
<PAGE>
REAL ESTATE PURCHASE AGREEMENT
THIS REAL ESTATE PURCHASE AGREEMENT (the "Agreement") is
made effective as of the ________ day of ________________, 1997 by
and between FULL TILT SPORTS, INC., a Colorado corporation (the
"Purchaser") and JAMES FISHER DEBERRY (the "Seller").
RECITALS
WHEREAS, the Seller is the owner of certain real property
with legal description of "attached as Exhibit "A" ", also known
as 4330 Buckingham Drive, Colorado Springs, Colorado 80907; and
WHEREAS, the Seller desires to sell, and the Purchaser desires
to purchase said real property.
NOW THEREFORE, in consideration of the mutual premises,
covenants and representations contained herein, and intending to
be legally bound, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
Terms of Transaction
1.1 Sale. In exchange for the payment by Purchaser to
Seller of the Purchase Price, as defined herein, and in
consideration of the premises and promises contained herein,
Seller shall transfer and deliver the Real Property, as defined
herein, to Purchaser at the Closing, as defined herein.
1.2 The Real Property. The real property of the Seller to
be transferred and delivered hereunder (the "Real Property")
consists of the following:
attached as Exhibit "A",
also known as 4330 Buckingham Drive, Colorado Springs, Colorado
80907. The Purchase Price includes any and all structures and
improvements located on the premises of the Real Property, and
any and all water rights and mineral rights thereon that are
owned by the Seller.
1.3 Purchase Price. At the Closing the Purchaser shall
deliver the purchase price of one hundred thirty two thousand
five hundred dollars ($132,500) plus any accrued interest and the
actual costs pertaining to this Agreement and this real estate
transaction incurred by the Seller as of the date of Closing (the
"Purchase Price") to the Seller, which shall be paid in cash.
ARTICLE II
1
<PAGE>
Closing
2.1 The closing as defined throughout this Agreement (the "Closing"),
shall take place at the office of on the date of _______________,
at ______ o'clock, ___. M., and being effective as of such date and time,
or at such other time and date as the parties mutually agree in writing.
ARTICLE III
Representation and Warranties of Seller
Seller represents and warrants the following:
3.1 Title to the Real Property. Seller has good and
marketable title to the Real Property, not subject to judgment,
mortgage, pledge, lien, assignment, option, encumbrance claim, or
other charge. None of the Real Property is held by Seller under
or subject to any lease, consignment, conditional sales contract
or other title retention agreement, except for a security
interest to secure a mortgage loan by Air Academy National Bank.
3.2 No Encumbrances. As of the Closing, Seller has not
granted a security interest in the Real Property, except for a
security interest to secure a mortgage loan by Air Academy
National Bank, which mortgage shall be paid at Closing.
3.3 Payment of Taxes. All applicable taxes have been paid
through December 31, 1996, and any applicable taxes for 1997,
which shall be prorated to the date of Closing, shall be paid by
the Seller on or before Closing.
ARTICLE IV
Representations and Warranties of Purchaser
Purchaser represents and warrants:
4.1 Corporate Organization. Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Colorado, with full corporate power to own
and operate its properties, to carry on its business, as it is
now being conducted, to enter into this Agreement, and to carry
out the transactions contemplated hereby.
4.2 Corporate Authority. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate actions on the part of Purchaser. This
Agreement when executed and delivered, will be the valid and
binding obligation of the Purchaser enforceable against Purchaser
2
<PAGE>
in accordance with their terms.
4.3 No Violation. Neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated hereby will result in a violation of, or be in
conflict with, or accelerate the performance required by
Purchaser's Articles of Incorporation or Bylaws or any order,
judgment, injunction, decree, statute, rule, or regulation
applicable to Purchaser.
4.4 Consents and Approvals. No consent, approval, or
authorization of, or declaration, filing, or registration with,
any governmental or regulatory authority or other third party is
required in connection with the execution, delivery, and
performance of this Agreement and the consummating of the
transactions contemplated hereby.
ARTICLE V
Conditions Precedent to Obligations of Purchaser
The obligations of Purchaser are subject to
satisfaction on or before the Closing of the following
conditions:
5.1 Financing. The purchase of the Real Property herein is
contingent upon the Purchaser obtaining financing for the full
amount of the Purchase Price that is satisfactory to the
Purchaser. The Purchaser shall make a good faith effort to
obtain such financing by the date of Closing herein. In the
event that the Purchaser is unable to obtain said financing by
the date of Closing, the Purchaser shall be under no obligation
to purchase the Real Property under this Agreement.
5.2 Title. Purchaser shall have the right to inspect the
title documents and title insurance commitment the Real Property
which shall be delivered to the Purchaser by the Seller at least
20 days prior to the date of Closing. On or before 10 days prior
to the date of Closing, the Purchaser may give written notice of
any unsatisfactory conditions of said title documents, and unless
such unsatisfactory conditions are cured to the Purchaser's
satisfaction prior to the date of Closing, the Purchaser shall be
under no obligation to purchase the Real Property under this
Agreement.
5.3 Inspection. Purchaser shall have the right to physically
inspect the Real Property. On or before 10 days prior to the
date of Closing, the Purchaser may give written notice of any
unsatisfactory conditions of the Real Property, and unless such
unsatisfactory conditions are cured to the Purchaser's
satisfaction prior to the date of Closing, the Purchaser shall be
under no obligation to purchase the Real Property under this
Agreement.
5.4 Performance. Seller shall have complied with each of
its agreements, obligations, and covenants contained herein.
3
<PAGE>
5.5 Representations and Warranties. The representations
and warranties made by Seller in this Agreement shall be true and
correct in all respects as if made on and as of the date of
Closing.
5.6 Due Diligence. Seller shall cooperate and provide access
to the Purchaser to conduct a due diligence verification of the
Seller's representations and warranties.
5.7 Encumbrances. Purchaser shall have received evidence,
reasonably satisfactory to it that the Real Property is free and
clear of all liens, security interests, claims, and encumbrances,
except as otherwise set forth herein.
5.8 Seller Action. All action required by Seller to
authorize and approve the transactions contemplated hereby shall
have been taken.
ARTICLE VI
Conditions Precedent to Obligations of Seller
The obligations of Seller are subject to satisfaction
at the Closing of the following conditions:
6.1 Performance. Purchaser shall have complied with each
of its agreements, obligations, and covenants contained herein.
6.2 Representations and Warranties. The representations
and warranties made by Purchaser in this Agreement shall be true
and correct in all respects as if made on and as of the date of
Closing.
6.3 Purchaser Action. All action required by Purchaser to
authorize and approve the transactions contemplated hereby shall
have been taken.
ARTICLE VII
Events to Take Place at the Closing
7.1 Deliveries by Seller. Seller shall execute and deliver
to Purchaser, each in form and substance reasonably satisfactory
to Purchaser:
(a) a General Warranty Deed transferring the Real Property
to the Purchaser; and
4
<PAGE>
(b) such other titles or agreements with covenants of
warranty, endorsements, assignments, and other good and
sufficient instruments of conveyance, transfer, and assignment as
shall be necessary to vest in the Purchaser good and merchantable
title to the Real Property.
7.2 Deliveries by Purchaser. Purchaser shall deliver to the
Seller the Purchase Price in accordance with Section 1.3 herein.
ARTICLE VIII
Miscellaneous
8.1 Assignment; Binding Effect. Purchaser may assign this
Agreement or any of its rights and duties hereunder with the
prior written consent of Seller. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns.
8.2 Taxes and Fees. Purchaser shall be liable for and pay
for any personal property, sales and use taxes arising as a
result of the transactions contemplated by this Agreement. All
other taxes, fees and expenses which arise as a result of the
consummation of the transactions contemplated hereby shall be
prorated to the date of Closing.
8.3 Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, all legal, consulting and
other expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expenses.
8.4 Termination. In the event this Agreement is terminated,
all payments and things of value received hereunder shall be returned
and the parties shall be relieved of all obligations hereunder.
8.5 Legal Advice. Both parties acknowledge that they have
had ample opportunity to consult with legal and tax counsel before
entering into this Agreement. The parties further acknowledge and
agree that this Agreement was negotiated at arms length and that any
provision herein shall not be construed against a party solely because
such provision was initially drafted by such party.
8.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be original and all
of which together shall constitute one and the same instrument.
8.7 Miscellaneous. This Agreement constitutes the entire
understanding of the parties with respect to the subject matter
herein. This Agreement shall be governed by the laws of the
State of Colorado. There are no representations, promises,
warranties, covenants or undertakings other than those expressly
set forth herein. No modification, waiver or termination of any
of the terms herein shall be valid unless in writing and executed
with the same formality as this Agreement. No waiver by either
party of any breach or default hereof by the other shall be
5
<PAGE>
deemed to be a waiver of any preceding or succeeding breach or
default hereof, and no waiver shall be operative unless the same
shall be in writing. The headings contained in this Agreement
are for convenience of reference only and shall not be deemed to
alter or affect any provision hereof. Should any provision of
this agreement be declared invalid by a court of competent
jurisdiction, the remaining provisions hereof shall remain in
full force and effect regardless of such declaration. In the
event of any dispute or litigation between the parties, the
prevailing party shall be entitled to reasonable attorneys fees
and costs. Time is of the essence.
IN WITNESS WHEREOF, the parties have executed this Real
Property Purchase Agreement on the date first above written.
PURCHASER: SELLER:
FULL TILT SPORTS, INC.
By: /s/ Roger K. Burnett /s/ James Fisher DeBerry
________________________ ______________________
Roger K. Burnett, President James Fisher DeBerry
6
PART III
EXHIBIT 6.6
ADMINISTRATIVE SERVICES AGREEMENT
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement")
is made and entered into to be effective the 1st day of
January, 1998, by and among FULL TILT SPORTS, INC., a Colorado
corporation (the "Company") and MCM CAPITAL MANAGEMENT, INC., a
Colorado corporation (the "Manager").
RECITALS
WHEREAS, the Company is engaged in the business of
manufacturing and distribution of sportswear and apparel, and
is in need of office facilities and support services to
facilitate its business; and
WHEREAS, the Manager is engaged in the business of
managing and administering the day to day operations of
businesses such as the Company, and the Company desires to
retain the Manager for such services;
NOW THEREFORE, in consideration of the Recitals that shall
be deemed to be a substantive part of this Agreement and the
mutual covenants, promises, agreements, representations and
warranties contained in this Agreement, the parties hereto do
hereby covenant, promise, agree, represent and warrant as
follows:
1. Management Services.
(a) The Company hereby engages the Manager to provide
administrative and support services reasonably required in the
ordinary course of the Company's business, including for the day
to day operations of the Company and such further services for
the benefit of the Company as described herein. The management
services (the "Management Services") provided by the Manager
herein shall include, but not be limited to:
(i) Office Services. Telephone
answering and receptionist services,
secretarial services including typing,
document and report preparation, record and
bookkeeping, personnel services, and other
support functions normally and reasonably
required in the ordinary course of the
Company's business;
(ii) Consulting Services. Manager shall
interface and provide Company information to
outside professionals and consultants, such
as attorneys and accountants, for purposes
such as Securities Exchange Commission
compliance filings and Internal Revenue
1
<PAGE>
Service tax reporting;
(iii) Facilities. Company shall have
access to, and may use as needed on a non-
exclusive basis, the Managers's office
facility consisting of approximately 3,000
square feet of office space located at the
Manager's principal business location at 5525
Erindale Drive, Suite 201, Colorado Springs,
Colorado 80918, with furniture, fixtures and
equipment located therein (the "Facilities").
The Company may use the Facilities for client
reception, conference rooms for meetings,
delivery of mail and packages, and as
executive and administrative offices. The
Company shall inform the Manager in advance
when use of the Facilities is requested for
the abovementioned purposes, which use shall
be subject to the Facilities' availability.
The Facilities shall be available subject to
the use and needs of the Facilities by the
Manager, which shall take precedence over the
Company's request and needs. The Company
shall have access to the Facilities during
normal business hours, Monday to Friday, 8 AM
to 5 PM or as otherwise arranged with the
Manager;
(iv) Warehouse and Storage. Company
shall also be afforded non-exclusive use of
the storage areas at the Manager's office for
delivery, warehousing and storage of the
Company's merchandise so as not to interfere
with the normal business operation of the
Manager. The Company shall have access to
the facilities for warehousing and storage
during normal business hours, Monday to
Friday, 8 AM to 5 PM or as otherwise arranged
with the Manager.
(b) The Manager hereby accepts such engagement and shall,
subject to the direction of the Board of Directors of the
Company, at all times faithfully, with diligence and to the best
of its ability, experience and talents, perform all the duties
required by the terms of this Agreement to the reasonable
satisfaction of the Company.
(c) The Manager shall devote as much of the Manager's time
and attention as is reasonably necessary to fulfill the Manager's
responsibilities herein. The Manager shall determine when and
where the Manager shall provide the Management Services. The
number and hours of service of the Manager's personnel assigned
to perform the Management Services shall be determined by the
Manager in its discretion.
2. Term. The term of this Agreement shall commence on
the date first written above, and shall continue for twelve (12)
consecutive months from the date of commencement, unless
terminated earlier in accordance with provisions hereinafter set
forth. At the expiration of the term of this Agreement, the
parties may upon written agreement, renew this Agreement for an
2
<PAGE>
additional twelve (12) month term.
3. Fees. The Company shall pay to the Manager a fee of
two thousand five hundred dollars ($2,500) per month gross plus
certain expenses itemized herein, payable on the first day of
each month.
4. Expenses. The Manager is authorized to incur reasonable
expenses for performing the Management Services. Such expenses
shall include costs for photocopies, long distance telephone,
overnight delivery, courier services, postage and other ordinary
office expenses incurred on behalf of the Company and not
included as Management Services. The Company shall reimburse the
Manager for all such expenses on the presentation by the Manager
of an itemized account of such expenditures. The Manager shall
prepare and deliver to the Company a written statement detailing
all expenses for the previous month.
5. Non-exclusivity. This Agreement is nonexclusive
and does not preclude the Manager from performing services of any
kind or nature for any other entities or concerns, or from
entering into any other business of any kind or nature.
6. Termination.
a) Termination by the Company With Cause. The Company may
Terminate this Agreement with cause at any time in accordance
with the terms and conditions herein, upon immediate notice to
the Manager. For the purpose of this section, "cause" shall be
defined as meaning conduct by the Manager which constitutes in
fact or law a breach of fiduciary duty or felonious conduct
having the effect, in the opinion of the Company, of materially
adversely affecting the Company or its reputation. In the event
of termination by the Company with cause, the Manager shall be
entitled to receive payment of the monthly fee herein up until
and including the month that such written notice is received.
The Manger shall not be entitled to any other compensation under
this Agreement.
b) Termination by Company Without Cause. The Company may
Terminate this Agreement without cause at any time, in accordance
with the terms and conditions herein, upon sixty (60) written
notice to the Manager. In the event of termination by the
Company without cause, the Manager shall be entitled to receive
the monthly fee herein for two (2) monthly periods, after the
Manager's receipt of such termination notice. The Manger shall
not be entitled to any other compensation under this Agreement.
c) Termination by Manager. The Manager may elect to
terminate this Agreement, with or without cause, for any reason
whatsoever, by providing the Company thirty (30) days written
notice of such election. In the event of such termination by the
Manager, the Manager shall be entitled to receive the monthly fee
3
<PAGE>
herein up to and including the month that notice of such
termination is received by the Company.
d) Return of Company Records and Material. Immediately upon
termination, the Manager shall return any and all records,
material and tangible things to the Company.
7. Independent Contractor Status. Manager shall be an
independent contractor with respect to all services provided
herein, and shall have no authority to bind the Company in any
manner. The Company shall not be responsible for payment of
FICA/FUTA or for providing workers' compensation insurance for
Manager. The Company shall not withhold any state or federal
income taxes on account of Manager's compensation. The Manager
shall make all arrangements necessary for timely payment of all
the foregoing on the Manager's own account. In the event the
Company is subject to any claim, action or liability in
connection with the aforementioned, including attorneys fees,
costs and expenses in the defense of any such action or claims,
the Manager shall discharge such claims, actions and liabilities
immediately and shall indemnify and hold harmless the Company for
such liabilities and expenses.
8. Confidential Information. Throughout the duration
of the Manager's service, the Manager shall be privy to a
substantial amount of data, information and knowledge which is
the proprietary and confidential property of the Company. For
the purposes of this Agreement, "trade secret or confidential or
proprietary information" means any information concerning the
Company or its business which the Manager learned during the
Manager's services at the Company and which is not generally
known or available outside of the Company; such information
includes, without limitation, information, whether written or
otherwise, regarding the Company's earnings, expenses,
manufacturing processes, material sources, equipment sources,
customers and prospective customers, business plans, strategies,
buying practices and procedures, prospective and executed
contracts and other business arrangements. The Manager
acknowledges that the Manager shall not either directly or
indirectly use, disclose or communicate to any person or entity
any trade secret or confidential or proprietary information of
the Company for any purpose at all whether during or after the
term of this Agreement, except to the extent any such information
becomes generally known to the public through no fault of the
Manager.
9. Indemnification. The Company shall indemnify and
hold harmless the Manager from and against any and all damages,
liabilities, actions, suits, proceedings, claims, threats,
demands, losses, costs and expenses (including attorneys' and
experts' fees) arising out of or in connection with: (a) the
negligent or intentionally wrongful acts or omissions of the
Company, its agents, servants, employees and independent
contractors, other than the Manager, under this Agreement; and
(b) any breach of or default by the Company under any covenant,
promise, agreement, representation or warranty set forth in this
Agreement.
4
<PAGE>
10. Governing Law. This Agreement shall be governed in
accordance with the laws of the State of Colorado.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement, on the date first above written.
COMPANY:
Full Tilt Sport, Inc.
By: /s/ Roger K. Burnett
___________________________
Roger K. Burnett, President
MANAGER:
MCM Capital Management, Inc.
By: /s/ Bill M. Conrad
__________________________
Bill M. Conrad, Vice President
5
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